Q1 2025 Gladstone Land Corp Earnings Call

Okay.

Operator: Greetings and welcome to the Gladstone Land Corporation First Quarter Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation.

Speaker Change: Greetings and welcome to the Lansdowne to the Gladstone Land Corporation first quarter earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

Operator: If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Speaker Change: If anyone should require operator assistance. Please press star zero on your telephone keypad.

Speaker Change: As a reminder, this conference is being recorded it is now.

Operator: It is now my pleasure to introduce David Gladstone, Chief Executive Officer and President. Please go ahead.

Speaker Change: My pleasure to introduce Gladstone, Chief Executive Officer, and President. Please go ahead.

David Gladstone: Okay Paul, thank you for that nice introduction and this is David Gladstone and welcome to the quarterly conference call for Gladstone Land. Thank you all for calling in today, we appreciate the time it takes. to listen and talk to you and... Thank you for listening to our presentation.

Speaker Change: Okay. Paul Thank you for that nice introduction and this is David Gladstone and welcome to the quarterly conference call for Gladstone land.

Speaker Change: You you all for calling in today, we appreciate the time it takes to listen and talk to you in.

Speaker Change: Thank you for listening to our presentation before I begin we'll start with Michael a counsel he's our general counsel Michael Thanks, David Good morning, everybody. Craves report May include forward looking statements under the Securities Act of 1933 Securities Exchange Act of late June 34, including those regarding our future performance are forward looking.

David Gladstone: Before I begin, we'll start with Michael LiCalsi, he's our General Counsel. Michael?

Michael LiCalsi: Thanks, David.

Michael LiCalsi: Good morning, everybody. Today's report may include forward-looking statements in the Securities Act of 1933, Securities Exchange Act of 1934, including those regarding our future performance. These forward-looking statements involve certain risks and uncertainties that are based on our current plans, which we believe to be reasonable. Many factors may cause our actual results to be materially different from the future results expressed through our employability forward-looking statements, including the risk factors in our Form 10-K and 10-Q of the documents we filed with the SEC. You can find them on our website, GladstoneLand.com. specifically the investors page on the SEC's website, SEC.gov.

Speaker Change: Statements involve certain risks and uncertainties that are based on our current plans, which we believe to be reasonable and many factors may cause our actual results to be in.

Speaker Change: Materially different from any future results expressed or implied by these forward looking statements, including the risk factors in our Form 10-K 10-Q.

Speaker Change: The documents were filed yesterday.

Speaker Change: Despite them on our website Gladstone land Dot com.

Speaker Change: Specifically, the investor's page Sec's website.

Speaker Change: As you can see that G O V and we undertake no obligation to publicly update or revise.

Michael LiCalsi: We undertake no obligation to publicly update or revise.

Michael LiCalsi: Any of these statements were the result of new information, future events, or otherwise, except as required by law.

Speaker Change: Any of these statements, whether a result of new information future events or otherwise.

Speaker Change: As required by law.

Michael LiCalsi: Today we will discuss FFO, which is a non-GAAP accounting term defined as net income excluding the gains or losses from sale of real estate and the impairment losses from property. plus depreciation and amortization of real estate assets. We may also discuss core FFO, which is generally FFO adjusted for certain. non-recurring revenues and expenses and adjusted FFO. To further adjust core FFO for certain non-cash items, such as converting gap rents to normalized cash rents, we believe these are better indications for better operating results and allow better comparability for our period-over-period performance.

Speaker Change: Well today, we will discuss that football, which is a non-GAAP accounting term defined as net income.

Speaker Change: The gains and losses.

Speaker Change: From sale of real estate and any impairment losses from property.

Speaker Change: Plus depreciation and amortization of real estate assets. We will also discuss cores, but just generally <unk> adjusted for certain.

Speaker Change: While our trailing revenues and expenses and adjusted <unk>.

Speaker Change: Okay.

Speaker Change: But if we further adjust core that's my fault for certain noncash items, such as converting GAAP rents to normalized cash rents. We believe these are better indications of better operating results in a lot better comparability period over period performance I'm pleased to visit our website, that's Gladstone land dotcom sign up for email.

Michael LiCalsi: and please visit our website, that's GladstoneLand.com. Sign up for our email notification service. You can also find us on Facebook. The keyword there is The Gladstone Company and on X, formerly known as Twitter. Our handle there is AtGladstoneComps.

Speaker Change: <unk> service you can also find the salt Facebook keyword there is the Gladstone companies and on X, formerly known as Twitter or handle theirs at Gladstone comps that today is an overview of our results. So we ask that you review our press release and Form 10-Q, both issued yesterday for more detailed information with that I'll turn it back to David Gladstone.

Michael LiCalsi: And today's an overview of our results. So we ask that you review our press release and form 10-Q, both issued yesterday for more detailed information.

David Gladstone: With that, I'll turn it back to David Gladstone. No, thank you, Michael.

David Gladstone: Thank you Michael I'll start with a brief overview of our farmland holdings. We currently have about 103000 acres.

David Gladstone: I'll start with a brief overview of our farmland holdings We currently have about 103,000 acres. And they own 50 different farms and about 55,000 acre-feet of water assets that we hold as well. One acre-foot is equal to about 326,000 gallons, so if you multiply that out, we own about 18 billion gallons of water. And that's very good because the west can be dry, but we're in good shape today. Our farms are in 15 different states, and more importantly, they're in 29 different growing regions. And all our water assets are in California. Our farms are leased to over 80 different tenant farmers.

David Gladstone: And they own 50 different farms and about 55000 acre feet of water assets that we hold as well one acre foot is equal to about 326000 gallons. So if you multiply that out we own about 18 billion gallons of water.

David Gladstone: And that's very good because the west Kansas dry, but we're in good shape today.

David Gladstone: Our farms are in 15 different states and more importantly, they're in 29 different growing regions in all our water assets are in California. Our farms are leased to over 80 different tenant farmers and then tenants on these farms are growing 60 different crops. So we're highly diversified.

David Gladstone: And the tenants on these farms are growing 60 different crops. So we're highly diversified. Most of our crops are fruits and vegetables and nuts, and these are the healthy things that people should be eating. You can find those in the produce section of the grocery store, which is where most of the crops grown on our farms are sold.

Speaker Change: Most of our crops fruits and vegetables, and nuts and these are the healthy things that people shouldn't be eating you can find those in the produce section of the grocery store.

David Gladstone: Which is where most of the crops grown on our farms are sold.

David Gladstone: As we mentioned in previous calls, we continue to be cautious with new investments because interest rates and our cost of capital remain very high and cap rates on row crops and farmlands are just too low to be something that we can do in buying more farmland, which remains very high value and interest rates and all the inputs to farming are very expensive these days.

David Gladstone: As we've mentioned in previous calls we continue to be cautious with new investments because interest rates.

David Gladstone: And our cost of capital remained very high in cap rates on row crops and farm lands are just too low to be.

David Gladstone: Something that we can do in.

David Gladstone: Buying more farmland.

David Gladstone: Which remains very high value in interest rates and all the inputs to farming are very expensive. These days and we also believe in is a good time to conserve cash given the uncertain times that we're all living in today.

David Gladstone: And we also believe in a good time to conserve cash given the uncertain times that we're all living in today. Regarding leasing activities so far in 2025, we executed seven new leases or amended some existing leases. mostly on the permanent crops out of the west. On one of these leases, we adjusted the lease to structure in a similar manner to what we've done on a few other farms, and that is we've reduced or eliminated the base rent so we're not being paid on a monthly basis, and in some case, provided the tenant with a little bit of cash to grow the crops on the farm.

David Gladstone: Regarding leasing activity, so far in 2020 five we actually executed seven new leases or amended some existing leases most of them on the permanent crops.

David Gladstone: Asked.

David Gladstone: Our one on one of these leases we adjusted the least is structured similar manager were down on a few other farms in that as we've reduced or eliminated the base rent so you're not being paid on a monthly basis.

David Gladstone: In some case provided the tenant with a little bit of cash too.

David Gladstone: Grow the crops on the farms.

David Gladstone: So the operating and capital costs are taken by us. In exchange for that, we significantly increase the participation rent component in the lease, the majority of which, unfortunately, will be recognized in the fourth quarter when we harvest the crops.

David Gladstone: So the operating and capital costs are.

David Gladstone: Taken by US in exchange for that we significantly increased the participation rent component and the leash and majority of which unfortunately will be recognized in the fourth quarter when we harvest the crops. So.

David Gladstone: So we're in the growing business with those eight farms that we've got.

David Gladstone: We're in a growing business with those eight farms that we've got it I wanted to touch a little bit more on us.

David Gladstone: I want to touch a little bit more on this. As we mentioned in prior calls, market conditions around many permanent crop farms in the West, particularly those growing nuts and grapes, have been hampered by lower crop prices and higher inputs and borrowing costs. As such, we decided to adjust the lease structure on six properties to help the grower minimize their fixed costs, but also allow us to participate in the upside. In essence, we are accepting a percentage of the gross crops that are for sale. and instead those rent payments that we normally were getting.

David Gladstone: We mentioned in prior calls calls market conditions.

David Gladstone: Around many permanent crop farms in the west, particularly that is growing nuts, and grapes have been hampered by lower crop prices and higher inputs and borrowing cost.

David Gladstone: As such we decided to adjust the lease structure on six properties to help that grow or minimize their fixed cost, but also allow us to participate in the upside in essence, we are accepting a percentage of the gross crops that are for sale.

David Gladstone: And instead of.

David Gladstone: The rent payments that we normally we're getting.

David Gladstone: We also decided to operate two properties ourselves with the help of a third-party operator. So the third-party operator is growing, and we're covering some of the costs. We assume the worst case scenario, and if we do, everything just doesn't work out our way. And, for example, if we had total crop losses because of some crazy atmospheric thing. then we expect the crop insurance that we have on this to be enough to cover all of our cost and also provide us with a small profit.

David Gladstone: We also decided to operate two properties ourselves with the help of a third party operator.

David Gladstone: So the third party operators is growing and we're covering some of the cost.

David Gladstone: We assume the worst case scenario and if we do it.

David Gladstone: Everything just doesn't work out our way.

David Gladstone: For example, if we had total crop losses because of some crazy atmosphere thing.

David Gladstone: Then we expect the crop insurance that we have on this to be enough to cover all of our costs and also provide us with a small profit.

David Gladstone: Now, we don't want, nor do we hope that we have to use that, but I can't talk at this point.

David Gladstone: Now, we don't want nor do we hope that we have to use that.

David Gladstone: But I cant talk workforce pardon my wife, just call me, let's see what's going on here I'm on a call I'm sorry.

David Gladstone: My wife just called me. Let's see what's going on here.

David Gladstone: I'm on a call. I'm sorry. Of course, our hope is that we have a good production on all of these farms so that we don't need to rely on crop insurance, in which case. could be significant. Just don't know and won't know until the fourth quarter when we actually sell the crop.

David Gladstone: Of course, our hope is that we have a good production on all of these farms. So that we don't need to rely on crop insurance in which case.

David Gladstone: It could be significant just don't know and won't know until the fourth quarter, when we actually sell the crops.

David Gladstone: We've been seeking positive movement in terms of pricing for almonds. We're seeing that happening now, and pistachios are doing well. And this is supposed to be a good year in terms of production. So we're hopeful of a strong turnout when we gather this information in the fourth quarter. But we really won't know much about it.

David Gladstone: We've been seeking positive movement in terms of pricing for them and so we're seeing that happening now.

David Gladstone: The statues are doing well and this is supposed to be a good year in terms of production. So we are hopeful of a strong turn out when we gather this information in the fourth quarter.

Speaker Change: Well, we really won't know.

David Gladstone: We'll give you progress reports as we go along when we find out what's going on in the farms. Our current plan is to move forward with this structure for 2025 and harvest these eight farms that way. then hopefully we'll revert back to more traditional lease structure next year. or we may look to sell some of these properties that we have. And the six leases we executed so far this year are expected to result in a year-over-year decrease in our annual NOI. But we'll see what that looks like. at the end of the year, so pretty flat year.

Speaker Change: Much about it won't give you progress reports as we go along when we find out what's going on in the farm. Our current plan is to move forward with this structure for 2025 and harvest. These eight farms that way.

Speaker Change: And hopefully they will revert back to more traditional lease structure next year.

Speaker Change: We may look to sell some of these properties that we have.

Speaker Change: And the six leases we executed so far this year are that could result in a year over year decrease in our annual NOI.

Speaker Change: Yeah.

Speaker Change: We'll see what that looks like.

Speaker Change: And at the end of the year, so pretty flat year.

David Gladstone: Looking ahead, we've had 16 lease schedules to expire throughout the rest of 2025, and due to some of these leases containing no fixed rent base and others including cash lease. both in exchange for increase in participation in this webinar. These leases actually account for negative $1.1 million. lease revenues during first quarter of 2025. So we've given up some straight line income. largely because we want to participate in the resulting from these leaf And again, I'll say it, we won't know much about it until the fourth quarter and we'll get our report card, so to speak, as we sell the...

Speaker Change: Looking ahead, we had 16 lease scheduled to expire throughout the rest of 2025 and due to some of these leases containing no fixed rent space.

Speaker Change: Others, including cash leases.

Speaker Change: Both in exchange for increasing participation in Ghana.

Speaker Change: Got it.

Speaker Change: These leases actually account for a negative $1 1 million.

Speaker Change: Lease revenues doing first quarter of 2025.

Speaker Change: So if you're giving up some straight line income.

Speaker Change: Largely because we want to participate in that.

Speaker Change: Sheltering from these leases and again I'll say, it and we won't know much about it until the fourth quarter and we will get our report card so to speak as we sell there.

Speaker Change: Okay.

David Gladstone: all the things that they're growing on the farm.

Speaker Change: All of the things that they're growing on the farm.

David Gladstone: We're in discussion with some current tenants. Perspective, New Tenet. about leasing these farms, including reverting some of these leases back to standard leases with fixed rates. Fixed Base Rent. Or if we're unable to do, come to terms on some of these leases, most likely we'll sell a couple of these farms. We believe we have some very valuable forms for selling, and selling is always an option.

Speaker Change: We're in discussion with some current tenants.

Speaker Change: And the perspective, new tenants about leasing these farms, including reverting some of these leases back just standard leases with fixed rates.

Speaker Change: Fixed base rents.

Speaker Change: Or if we're unable to do come to terms on some of these leases are just like we will sell a couple of these farms. We believe we have some very valuable farms for selling.

Speaker Change: As always and selling is always an option.

David Gladstone: And now I'll give a quick update on some of the remaining tenant issues that we have. We currently have five farms, that's part of the eight, that are vacant. two properties and companies, four farms that are direct operating. So we've got eight of these properties that we've gone from having fixed rent leases into participation leases. And we're recognizing revenues from the leases with three centers. who are collectively leasing five of our farms on cash basis.

Speaker Change: And now I'll give a quick update on some of the remaining tenant issues that we have we currently have.

Speaker Change: Five farms, that's part of the eight that are.

Speaker Change: Our vacant.

Speaker Change: Two properties and companies four farms that are direct operating so we've got eight of these properties that we've gone from having.

Speaker Change: Fixed rent leases into participation leashes leases and we're recognizing revenues from new leases with three tenants.

Speaker Change: Or collectively leasing five of our firms on cash basis regarding these farms were in discussions with various potential buyers.

David Gladstone: Regarding these farms, we're in discussions with various potential buyers. and Tennant. Buy or leave. properties and we hope to get these remaining issues resolved later this year.

Speaker Change: And tenants.

Speaker Change: To buy or lease these properties and would hope to get these remaining issues resolved later this year.

David Gladstone: And if we're unable to come up with an acceptable resolution at about a year in, I'll probably be listing some of these farms for sale.

Speaker Change: And therefore, I'm able to come up with an acceptable resolution that's about a year end.

Speaker Change: The listing some of these farms for sale.

David Gladstone: And just note on tariffs, which everybody's talking about these days. But most fresh produce, such as berries and vegetables, are somewhat insulated from the impact of tariffs because, due to a strong domestic consumption, we're just selling those to other Americans. The nut sector, on the other hand, is vulnerable because 70% or so of U.S. grown almonds and pistachios are exported annually. They box them up in boxes and ship them out. And China has, in the past, done a significant portion of those. It's down substantially now. And we have other countries that are more involved in buying our almonds and pistachios.

Speaker Change: And just note.

Speaker Change: Tariff tariffs, which everybody's talking about these days.

Speaker Change: Most fresh produce such as berries and vegetables are somewhat insulated from the impact of tariffs because due to a strong domestic consumption. We're just selling those to other Americans in that sector on the other hand is vulnerable because 78% or so of <unk>.

Speaker Change: U S grown almonds and pistachios are exported annually the box them up in boxes and ship them out.

Speaker Change: And China has in the past been a significant portion of that.

Speaker Change: Bose, it's down substantially now and we have other countries that are more involved in buying almonds pistachios.

David Gladstone: Before the tariff announcement, almond prices had risen significantly year over year, and pistachios remained stable, although slightly. While the full impact of tariffs on pricing is still unfolding, we are continuing to monitor the situation. In response to previous rounds of tariffs, China shifted much of its almond demand to other countries. and it has also reduced its imports of U.S. potatoes due to more recent tariffs. Some of the largest importers of U.S. almonds and pistachios are now in India. European Union, and Turkey. none of which have announced any tariffs on the U.S. goods. These demand shifts could help stabilize prices for U.S.

Speaker Change: For the tariffs announcements all arm prices have risen significantly on a year over year as dashes remains stable.

Speaker Change: Whether that slightly.

Speaker Change: The impact of terrorists pricing is still unfolding.

Speaker Change: We're continuing to monitor the situation.

Speaker Change: In response to a previous rounds.

Speaker Change: Terrorists, China shifting much of it's Aman demand to other countries.

Speaker Change: And then there's also reduced its imports in the U S to test shows due to more recent tariffs as a result.

Speaker Change: Some of the largest importers of U S almonds and pistachios are now in India.

Speaker Change: European Union.

Speaker Change: In Turkey.

Speaker Change: None of which had announced any tariffs on U S goods.

Speaker Change: These demand shifts could help stabilize prices for U S and that's all about market dynamics are still evolving as they always do this is not an exceptional years, just a straightforward year in that regard another factor impacting export demand is the weakening of the weakening of the U S dollar.

David Gladstone: nets, although market dynamics are still evolving, as they always do.

David Gladstone: This is not an exceptional year, it's just a straightforward year in that regard. Another factor impacting export demand is the weakening of the U.S. dollar. But the dollar gets weaker against other currencies. in you, for example. This global market helps mitigate any of the negative impacts from terror.

Speaker Change: As the dollar gets weaker against other currencies say.

Speaker Change: EU for example.

Speaker Change: Global market helps mitigate any of the negative impacts from tariffs.

Lewis Parrish: At this point, I'm going to turn it over to Lewis, and Lewis, of course, will go through the numbers. Go ahead, Lewis. All right.

Speaker Change: At this point I'm going to turn it over to Lewis and Lewis and of course as you go through the numbers go ahead. Louis Alright. Thank you David and good morning, everyone I'll begin with our financing activity.

Lewis Parrish: Thank you, David, and good morning, everyone. I'll begin with our financing activity. In connection with certain property sales, we paid off about $19.5 million of loans that were scheduled to reprice at market rates later this year. We do not borrow any new money or issue any equity during the quarter.

Speaker Change: In connection with certain property sales, we paid off about $19 $5 million of loans that were scheduled to reprice at market rates later this year.

Speaker Change: We did not borrow any new money or issue any equity during the quarter. So.

Lewis Parrish: So we'll move on to our operating results. For the first quarter, we had net income of about $15.1 million, and net income to common shareholders of $9.1 million, or $0.25 per share. Adjusted FFO was approximately $2 million, or $0.06 per share, compared to $5.1 million, or $0.14 per share in the same quarter last year. Dividends declared per common share were $0.14 in both quarters. The year-over-year decrease in AFFO is primarily driven by recent changes in lease structures on certain farms and certain tenancy issues that resulted in farm vacancies, leading to reduced revenues and higher costs.

Speaker Change: So when we wanted to our operating results for the first quarter. We had net income of about $15 $1 million and net income to common shareholders of $9 $1 million or 25 cents per share.

Speaker Change: Adjusted <unk> was approximately $2 million or <unk> <unk> per share compared to $5 1 million or 14 cents per share in the same quarter last year.

Dividends declared per common share were <unk> 14 cents in both quarters.

Speaker Change: The year over year decrease in <unk> was primarily driven by recent changes in lease structures with certain farms and certain tenancy issues that resulted in foreign vacancies, leading to reduced revenues and higher costs.

Lewis Parrish: as well as lots of revenues from farms sold over the past. Fixed base cash rents decreased by about $5.7 million compared to the prior year quarter due to the reasons just mentioned, and again, primarily the vacancies we continue to work through and structural changes made to certain leases that have reduced or eliminated fixed base cash rents or in some cases provided cash lease incentives to certain tenants in exchange for significantly increasing the crop share components in the lease. And as David mentioned, the results of these crop share components will not be known until the harvest is completed later this year.

Speaker Change: As well as lost revenues from farms sold over the past year.

Speaker Change: Fixed base cash rents decreased by about $5 $7 million compared to the prior year quarter due to the reasons just mentioned again, primarily the vacancies we continue to work through and structural changes made a certain leases.

Speaker Change: We reduced or eliminated fixed base cash rents or in some cases provided cash lease incentives for certain tenants in exchange for a significantly increase in the crop share components in the leases.

Speaker Change: David mentioned the results of these crop share components will not be known until the harvest is completed later this year.

Lewis Parrish: The decrease in fixed base cash rents was partially offset by a $2.4 million lease termination fee we received from an outgoing tenant who previously leased three of our farms, along with about $465,000 of participation rents recorded during the current quarter, primarily due to cash collected on the wine grape sales.

Speaker Change: The decrease in fixed base fixed base cash rents was partially offset by a $2 4 million lease termination fee. We received from an outgoing tenant who previously leased three of our farms.

Speaker Change: Along with about $465000 of participation rents recorded during the current quarter.

Speaker Change: Due to cash collected on the Y grade yourselves.

Lewis Parrish: And we mentioned this on the past couple of calls, but with a few additional agreements now in place, I think it's worth providing an update to the numbers. As a result of the change in lease structures we made on some of the farms, we are expecting a total year over year decline of about 17 million dollars in our fixed base rents for fiscal year 2025 compared to 24. This figure consists of the base rent that we recognized last year under the prior leases, plus the cash allowances granted to certain tenants for the 2025 crop year.

Speaker Change: And we mentioned this on the past couple of calls, but with a few additional agreements now in place I think it's worth providing an update to the numbers.

Speaker Change: As a result of the change in lease structures. We made on some of the farms. We are expecting a total year over year decline of about $17 million in our fixed base rents for fiscal year 2025 compared to 24.

Speaker Change: The figure consists of the base rents that we recognized last year under the prior leases plus the cash allowances granted to certain tenants for the 2025 crop year.

Lewis Parrish: This will be shown as a reduction in our fixed base rents at a rate of roughly four to five million dollars per quarter in 2025, which is consistent with the impact we saw in the first quarter. And in turn, we expect most of the resulting crop share proceeds from these leases to be recognized as participation rent in the fourth quarter of 2025, with the remaining smaller portion to be recognized in the second half of 2026. So in essence, we're shifting this revenue from fixed base rents to participation rents over the next couple of years. As a result, we expect earnings this year will be more heavily weighted towards the fourth quarter, with lighter earnings coming through in the first three quarters compared to prior years.

Speaker Change: This will be shown as a reduction in our fixed base rents at a rate of roughly $4 million to $5 million per quarter in 2025, which is consistent with the impact we saw in the first quarter here.

Speaker Change: And in turn we expect most of the resulting crop share proceeds from these leases to be recognized as participation rate in the fourth quarter of 2025 with the remaining smaller portion to be recognized in the second half of 2026.

Speaker Change: So in essence, we're shifting this revenue from fixed base rents to participation rents over the next couple of years.

Speaker Change: As a result, we expect earnings this year will be more heavily weighted towards the fourth quarter with lighter earnings coming through the first three quarters compared to prior years.

Lewis Parrish: On the expense side, excluding reimbursable items and certain non-recurring or non-cash charges, our core operating expenses increased by about $365,000 during the current quarter. Regarding the related party fees, excluding a capital gains fee that was triggered by recent sales, total related party fees decreased by about $60,000, driven by a lower base management fee due to recent farm sales. The capital gains fee is not payable until after the end of the fiscal year and remains subject to adjustment throughout 2025 based on future asset sales or dispositions, so it's been added back to AFFO for the time being.

Speaker Change: On the expense side, excluding reimbursable items, and certain non recurring or non cash charges. Our core operating expenses increased by about $365000 during the current quarter.

Speaker Change: Regarding our related party fees, excluding the capital gains fee that was triggered by recent sales totally related party fees decreased by about $60000 driven by a lower base management fees due to recent farm sales.

Speaker Change: The capital gains fee is not payable until after the end of the fiscal year and remains subject to adjustment throughout 2025 based on future asset sales or dispositions.

Speaker Change: So it's been added back to <unk> for the time being.

Lewis Parrish: Our remaining core operating expenses increased by about $425,000, which is primarily due to additional property operating expenses associated with farms that are either vacant, direct-operated, or non-accrual status. This included additional property taxes, which were previously the responsibility of prior tenants, as well as additional legal fees related to leasing activity, establishing direct farming operations on certain farms, and protecting water rights on certain farms in California.

Speaker Change: Our remaining core operating expenses increased by about $425000, which was primarily due to additional property operating expenses associated with foreign so they were either vacant direct operated on non accrual status.

Speaker Change: This included additional property taxes, which were previously the responsibility of prior tenants as well as additional legal fees related to leasing activity, establishing direct farming operation, so certain farms and protecting water rights on certain farms in California.

Lewis Parrish: Finally, our other expenses decreased mainly due to reduced interest expense and preferred dividend payments driven by loan repayments and preferred repurchases completed over the past Turning to liquidity, including availability on our lines of credit and other undrawn notes, we currently have access to over $180 million of capital, including about $40 million of cash on hand. In addition, we have nearly $150 million of unpledged property. Over 99.9% of our borrowings are fixed rates with a rated average rate of 3.41% locked in for an additional 3.4 years. As a result, our operating results have experienced minimal impact from rising interest rates over the past few years, and we believe our current borrowing structure provides strong protection should interest rates continue at elevated levels.

Finally, our other expenses decreased mainly due to reduced reduced interest expense and preferred dividend payments driven by loan repayments and preferred repurchases completed over the past year.

Speaker Change: Turning to liquidity, including availability on our lines of credit and other Undrawn notes. We're currently have access to over $180 million of capital, including about $40 million of cash on hand. In addition, we have nearly $150 million of Unpledged properties.

Speaker Change: Over 99, 9% of our borrowings are fixed rates with a weighted average rate of 3.41% locked in for an additional three four years.

Speaker Change: As a result, our operating results have experienced minimal impact from rising interest rates over the past few years and we believe our current borrowing structure provide strong protection should interest rates continue at elevated levels.

Lewis Parrish: Looking at upcoming debt maturities, we have about $28 million coming due over the next 12 months. Of that, roughly $11 million consists of individual loan maturities. And given the value of the underlying collateral, we do not anticipate any issues refinancing these loans if we choose to do so. So excluding those maturities, we have about $17 million of scheduled principal amortization coming due over the next 12 months, representing less than 4% of our total debt outstanding. In addition, we have about $7 million of loans with fixed rate terms that are set to expire within the next year that the loans themselves are not maturing.

Speaker Change: Looking at our upcoming debt maturities, we have about $28 million coming due over the next 12 months of that roughly $11 million consists of individual loan maturities and given the value of the underlying collateral we do not.

Speaker Change: I anticipate any issues refinancing these loans, if we choose to do so.

Speaker Change: So excluding those maturities, we have about $17 million of scheduled principal amortization coming due over the next 12 months, representing less than 4% of our total debt outstanding.

Speaker Change: In addition, we have about $7 million of loans with fixed rate terms terms that are set to expire within the next year that the loans themselves are not maturing.

Lewis Parrish: Finally, regarding our common distribution, in April, we declared a monthly dividend of 4.67 cents per share for the second quarter of 2025. Based on our current stock price of $19.65, this equates to an annualized yield of 5.8%, which is above the average dividend yield across the broader wheat sector.

Speaker Change: And finally regarding our common distribution in April we declared a monthly dividend of $4 six seven cents per share for the second quarter of 2025.

Speaker Change: Based on our current stock price of $19.65. This equates to an annualized yield of five 8%, which is above the average dividend yield across the broader REIT sector.

Lewis Parrish: We're holding the dividend at its current level for now, and we'll continue to evaluate it as more information becomes available regarding the 2025 ARPA.

Speaker Change: We're holding the dividend at its current level for now and we will continue to evaluate it as more information becomes available regarding the 2025 harvest.

David Gladstone: With that, I'll turn the program back over to David. So we're ready if interest rates come down, because there's no use buying it unless you have low-cost capital. But as mentioned on prior calls, we're still being more cautious on the acquisitions front, because our cost of capital remains very high. And while we have seen decreases in pricing for certain permanent crops. Farms Out West, the value of most row crop farms like those growing strawberries remains high and cap rates on most of those farms are just high enough to make. financing card. worrisome for people who are growing this crop.

Speaker Change: With that I'll turn the program back over to David Okay. Thank you. Louis Nice report, we continue to stay active in the market showed a good acquisition opportunity come along.

Louis: We're ready if interest rates come down because there's no use bang it unless you have a low cost capital, but as mentioned on prior calls with still being more cautious on the acquisitions front, because our cost of capital remains very high.

Louis: And while we have seen decreases in pricing for certain permanent crops.

Louis: And farms out west.

Louis: Most row crop farms like that is growing strawberries remains high and cap rates on most of those farms are just high enough to make.

Louis: Financing costs.

Louis: Worrisome for people, who are growing those crops.

David Gladstone: So as a result, acquisition activity remains slow to none for us, and probably will for the least the next year. 12 months. Interest rates are still very high. and banks are charging very high prices. And that's very bad for farming, especially for farmers who are borrowing money to plant their crops and also to harvest their. Keep getting reduced or pushed further out so that amounts of timing of any additional rate cuts remains uncertain. We just don't know what the Federal Reserve is going to do, and they almost dictate. straight through to all the federal banks that we have our loans.

Louis: So as a result of acquisition activity remains slow to none.

Louis: For us and probably will for the at least the next.

Louis: 12 months interest rates are still very high.

Louis: And that banks are charging very high prices and that's very bad for farming.

Ashley: Ashley for farmers, who are borrowing money to plant their crops and also to harvest their crops.

Speaker Change: Getting reduced are pushed further out so that amounts or timing of any additional rate cuts remains uncertain. We just don't know what the federal reserve is going to do and they almost dictate.

Speaker Change: Straight through to all the federal banks that we have are alone.

David Gladstone: But we do hope that rates will come down from some points in the near future so that we can start looking at buying more farms. And just a final point, excuse me, I have a frog in my throat. We believe that investing in farmland growing crops that contribute to a healthy lifestyle such as fruits and vegetables and nuts follows the trend that we're seeing in the market today. Overall, demand for the prime farmland growing berries and vegetables remains stable to strong, almost all areas where farms are located, particularly both of those east and west coast.

Speaker Change: Well, we do hope and rates will come down at some point in the near future. So that we can start looking and buying more farms again.

Speaker Change: Okay.

Speaker Change: And just a final point.

Speaker Change: No shneur frog in my throat.

Speaker Change: We believe that investing in farmland growing crops that contribute to healthy lifestyles, such as fruits and vegetables and nuts follows the trend that we're seeing in the market today.

Speaker Change: Overall demand for prime farmland growing berries, and vegetables remains stable to strong.

Speaker Change: Most all areas, where our farms are located particular.

Speaker Change: Both of those eastern West Coast as mentioned earlier crop prices of certain permanent crops such as nuts.

David Gladstone: As mentioned earlier, crop prices of certain permanent crops such as nuts and Wine Grapes have been depressed lately, which has impacted the value of our underlying farmland.

Speaker Change: And wine grapes have been depressed lately.

Speaker Change: Each has impacted the value of our underlying farmland.

David Gladstone: Please remember, though, for this company, and I guess for all companies, for that matter, purchasing stock in this company is a long-term investment in farmland. Historically speaking, long-term returns remain strong over time, but there are occasionally some ups and downs, as there has been for the last year and a half since the pandemic. Right now, there's a portion of our portfolio that's in... down cycle, as we call it, and we are working hard to maneuver through it. We expect inflation, particularly in the food sector, to continue to increase over time and we expect the values of the underlying farmland to increase over time, as they have mostly in the past.

Speaker Change: Please remember, though for this company and I guess for all companies for that matter.

Speaker Change: Purchasing stock in this company is a long term investment in farmland historically speaking long term returns remain strong over time.

Speaker Change: But there are occasionally some ups and downs as it has been for the last year and a half since the pandemic.

Speaker Change: Pandemic.

Speaker Change: Right now there is a portion of our portfolio.

Speaker Change: And.

Speaker Change: Down cycle as we call it and we're working hard to maneuver through it.

Speaker Change: We expect inflation, particularly in the food sector to continue to increase over time, and we expect the values of the underlying farmland to increase over time as I have mostly in the past.

David Gladstone: We expect this especially to be true of fresh produce in the food section and the trend of more people to eat those foods rather than some of the bad foods that are out there.

Speaker Change: We expect this especially be true of fresh produce in the foods food section and the trend of more people to eat those.

Speaker Change: <unk> rather than some of the bad foods that are out there.

Operator: Now we'll have some questions from those who follow us and Operator Paul, would you please come on and tell them how they can ask a question? Thank you.

Speaker Change: Now I have some questions from those who follow us and operator, Paul would you. Please come on and tell them how they can ask a question.

Speaker Change: Yeah.

Operator: We'll now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 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 keys.

Speaker Change: Thank you well now be conducting a question and answer session.

Speaker Change: Like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Confirmation tone will indicate your line is in the question queue. You May press star two to remove your question from the queue for participants using speaker equipment may be necessary to pick up your handset before pressing the star keys.

Operator: One moment please while we poll for questions.

Speaker Change: One moment, please boy poll for questions.

Speaker Change: Yeah.

Gaurav Mehta: Our first question is from Gaurav Mehta with Alliance Global Partners. Thank you. Good morning. I wanted to clarify your comments around.

Speaker Change: Our first question is from Gaurav Mehta with Alliance Global partners.

Gaurav Mehta: Thank you good morning.

Speaker Change: I wanted to say.

Gaurav Mehta: I wanted to clarify your.

Gaurav Mehta: Comments around seven.

Lewis Parrish: $17 million of lower revenues in 25 versus 24, it seems like a higher number than I think $13 million that you guys mentioned on the last call. So were there any more farms added to like the fixed to participation rent structure that increased that number for 25? Yes, there was one additional farm that the we executed a new lease on where we gave the tenant a lease incentive and there was one farm one property that we took over to be direct operated. So the The lost revenues that were recognized last year from those two farms were added to that as well as the lease incentive we gave one time.

Gaurav Mehta: $17 million.

Gaurav Mehta: All of lower revenues from 25 24.

Speaker Change: It seems like a higher number than I think $13 million that you guys mentioned on the last call. So was there any more farms at it.

Speaker Change: So like the fixture participation rent structure of that.

Speaker Change: That number of about 25.

Speaker Change: Yes, there was one additional foreign debt the we executed a new lease on where we gave the tenant lease incentives and there was one farm one property that we took over to be direct operating so the.

Speaker Change: The lost revenues that were recognized last year from those two funds were added to that as well as the lease incentive we gave one tenant.

Lewis Parrish: Okay and so in terms of the total participation rents that you guys expect in 2025 so that's 17 million dollars plus plus some additional number as well based on last year's run rate. Yes, so as David said, the eight properties that are kind of in this bucket of having a lease incentive or being direct-operated, we do expect to make all of that $17 million back. Insurance should cover that number plus a little bit of a profit. Of course, we're hoping not to have to use it and to be able to show a higher profit. But the split of the revenues coming will be between Q4'25 and Q4'26.

Speaker Change: Okay, and so in terms of the total participation rents that you guys are expecting 25, so that $17 million plus but from a different number.

Speaker Change: As well based on last year's run rate.

Speaker Change: Yes, I am sorry.

Gaurav Mehta: As David said, the eight properties that are kind of in this this bucket of having a lease incentive or being direct operated we do expect to meet make all of that $17 million back in.

Gaurav Mehta: Insurance should cover that number plus a little bit of a profit.

Gaurav Mehta: Of course, we're hoping not to have to use it and that to be able to show a higher profit.

But the the split of the split of the revenues coming will be between Q4, 'twenty five and Q4 of 26.

Lewis Parrish: If we had to guess, maybe we'll get between 60-70% of that this year, and then the remaining amount will be in 2026, second half of 2026. And so in addition to 17, I think last year you had $9.4 million of participation, right? So it's going to be last year's run rate plus additional 17, right? Not exactly, because some of that participation rate came from farms that are now in this adjusted lease structure, if you will. So that $9.4 million would probably be a little bit lower this year, and then add the $17 million plus any profit, we're able to...

Gaurav Mehta: If we had to guess maybe will get between 60 and 70% of that this year and then there was the remaining amount would be in 2026 second half of 'twenty six.

Gaurav Mehta: And so in addition to 17 I think last year, you had $9 $4 million of participation rents. So it's it's going to be last year's run rate plus additional 17 right.

Gaurav Mehta: Not exactly because some of those some of that participation rate came from farms that are now in this adjusted lease structure. If you will so that $9 $4 million would probably be probably be a little bit lower this year and then.

Gaurav Mehta: And the $17 million plus any profit we're able to.

Lewis Parrish: to generate on these farms. for the current year.

Gaurav Mehta: To generate on these farms for the current year.

Lewis Parrish: Okay, and then lastly, the $2.4 million termination fee, can you provide some color on that form?

Gaurav Mehta: Okay, and then the lastly that $2 $4 million termination fee you can you provide some color on that farm.

Lewis Parrish: Yeah, so those were just three almond farms that 110 leased and, and those three farms are vacant now we got a termination fee for letting them out of certain lease obligations and One time event, of course, we won't get that again, but we are working to working through a variety of options on those three farms to get income coming in on those farms again. Okay, thank you.

Gaurav Mehta: Yeah. So those are just.

Gaurav Mehta: Three arm and farms that one tenant lease then.

Gaurav Mehta: And those three farms are vacant now we got a termination fee for letting them out of certain lease obligations are men.

Gaurav Mehta: One time event of course, we know we won't get that again, but we are working to working through it a variety of options on those three farms to get income coming in on those funds again.

Gaurav Mehta: Okay. Thank you that's all I had.

Gaurav Mehta: That's all I have.

Rob Stevenson: Okay, next question, Paul. Our next question is from Rob Stevenson with Janney Montgomery Scott. Good morning guys.

Gaurav Mehta: Okay next question Paul.

Speaker Change: Our next question is from Rob Stevenson with Janney Montgomery Scott.

Rob Stevenson: Hey, good morning, guys.

Rob Stevenson: How should we be thinking about additional sales here in the second quarter and going forward throughout 2025? It doesn't look like that there's anything held for sale at March 31st. No, we've had some, we have some farms that we've listed for sale, but we don't have any contracts that we want to execute. Okay, and then the five assets that are vacant now, I assume that that's the three almond farms plus two others there. How are those being looked at right now? Are the other ones vacant? Is there stuff planted on there that you guys are, you know, taking care of on your own?

Speaker Change: Should we be thinking about additional sales here in the second quarter and going forward throughout 2025. It doesn't look like there's anything held for sale at March 31.

Speaker Change: No. We've had some we have some farms that we've listed for sale, but we don't have any contracts that we want to execute on.

Speaker Change: Okay.

Speaker Change: And then the five assets.

Speaker Change: That are vacant now I assume that thats, the three <unk> farms, plus two others there.

Speaker Change: How long are those being looked at right now or the other ones vacant is there stuff plants. It on there that you guys are you know.

Rob Stevenson: Are they just raw land? How should we be thinking about that? And the ability for that to be, you know, somewhat of a kicker later on this year? So two of them are open ground. Nothing is planted on this, so it's pretty low cost to keep those going. It's just their real estate taxes, which are pretty low on those. And the other three are on the properties. These trees are at the end of their life, so they will be pulled out eventually. But as far as maintenance costs, it's also just the real estate taxes on those three farms that we're having to bear at the moment.

Speaker Change: Taking care of on your own or are they just raw land, how should we be thinking about that and the ability for that to be somewhat of a kicker later on this year.

So two of them are often ground nothing is planned it honestly, it's pretty low cost to keep those going at it just real estate taxes, which are pretty low windows.

Speaker Change: And the other the other three Avi on their properties are these trees are at the end of the life. So they will be pulled out eventually.

Speaker Change: But as far as maintenance costs. It's also just the real estate taxes on those three farms that that we're having to bear at the moment.

Speaker Change:

Rob Stevenson: We have a few, several different options that we're kind of evaluating for each of these regard, I mean we could be entering into fouling programs, leasing off water rights, looking at potential new crops to plant there, which crops make the most sense in these regions with the water availability, market demand, tenant demand. But it's nothing is in stone yet. We're kind of in the process of. throwing around a few different options and seeing which makes the most sense. Hopefully, we'll get a few of these turned into income producing properties through the end of the year, but a couple of them could could swing into next year as well.

Speaker Change: Yes, we have several different options that were kind of.

Speaker Change: Evaluating for each of these regard I mean, we could be entering into following programs leasing off water rates looking at potential new crops to plant, there, which which crops and make the most sense in these regions with the water availability.

Speaker Change: End market demand tenant demand.

Speaker Change: But it's nothing is in stone, yet we're kind of in the process of doing.

Speaker Change: Throwing around a few different options and seeing which makes no sense hopefully we'll get a few of these turned into income producing properties through the end of the year, but a couple of them could that could swing into next year as well.

Rob Stevenson: Are the almond farms close enough to population areas where it could make sense to sell to a homebuilder? Not at this time, we don't think. Okay.

Speaker Change: Or the <unk> farms close enough to.

Speaker Change: Population areas, where it could make sense to sell to a homebuilder.

Speaker Change: Not at this time, we don't think now.

Rob Stevenson: And then, David, last month the common stock went below $9 for the first time since 2016.

Speaker Change: Okay.

Speaker Change: And then David last month, the common stock went below $9 for the first time since 2016, how do you and the board thinking about possibly repurchasing shares, especially with the <unk>.

David Gladstone: How do you and the board thinking about, you know, possibly repurchasing shares, especially with the, you know, the asset sales in the first quarter and some cash on the balance sheet, you know, if the stock continues to be, you know, cheap in the, you know, sub $9.50 range? Yeah, it's always difficult. We're right now harboring cash. And the reason we're doing that is, worst nightmare is you have something come due and don't have the cash to pay for it. What we never want to do. And so we're making sure that we're in a position to borrow more money.

Speaker Change: Asset sales in the first quarter and some cash on the balance sheet.

Speaker Change: If the stock continues to be cheap and the.

Speaker Change: Sub $9 50 range.

Speaker Change: Yeah, it's always difficult we are right now harboring cash and the reason we're doing that is our worst nightmare is you have something come due and don't have the cash to pay for it that's what we never want to do and so we're making sure that we're in a position to borrow more money all of our <unk>.

David Gladstone: All of our banks are telling us, please take down our money. And our statement, of course, is reduce the interest rate and we'll take it. But right now, the farming area is kind of locked up tight. Not many people doing things, mainly because interest rates are too high. And while we don't think about it that way, farming is a situation in which we need to borrow more money. You need to be able to borrow money to harvest and borrow money to plant, and we just don't want to get in a situation where we can't. have crops come for our way during the next year and so I'm a little bit skittish on using my cash My CFO keeps looking at me saying, let's spend some money.

Speaker Change: Thanks for telling US please take down our money in our statement of course is reduce the interest rate and we'll take it but right now the farming area is kind of locked up tight not many people doing things, mainly because interest rates are too high and while we don't think about it that.

Speaker Change: Wei farming is a situation in which.

Speaker Change: You need to be able to borrow money to harvest and.

Speaker Change: Borrowing money to plant and we just don't want to get in a situation where we can't.

Speaker Change: <unk>.

Speaker Change: Have crops come our.

Speaker Change: Our way during the next year, and so I'm, a little bit skittish on using my cash and my CFO.

Speaker Change: Looking at me, saying, let's spend some money, but we could buy back preferred stock and make a lot of money for our stockholders, but you have to give up the liquidity and I'm just not willing to do that so we're going to remain highly liquid for at least the rest of this year and we'll have to see how well we do it.

David Gladstone: But we could buy back preferred stock and make a lot of money for our stockholders. But you have to give up the liquidity. And I'm just not willing to do that.

David Gladstone: So we're going to remain highly liquid for at least the rest of this year. And we'll have to see how well we do. If we do extremely well at growing in these growing situations and make a lot of money, that might change my mind. But we won't know that until probably toward the end of this year. So you're right. We could make a lot of money and make our shareholders happy in the short term. But if we run into that brick wall of not having money to do things, then the game is not over. But it's really hurt.

Speaker Change: We do extremely well at growing in these growing situations and make a lot of money that might change my mind, but we won't know that until probably towards the end of this year.

Speaker Change: So youre right, we could make a lot of money and make our shareholders happy in the short term, but if we run into that brick wall of not having money to do things then.

Speaker Change: The game is not over but it's really hurt and so.

David Gladstone: And so Rob, we're sticking with the idea of having enough money to do all the things that we need to do in order to be a farmer. And that.

Speaker Change: Rob we're sticking with the idea of having enough money to do all the things that we need to do in order to be a farmer and that's.

David Gladstone: I've had some real good friends in the farming business that have just had to quit because they ran out of money. So we've got to keep ourselves highly liquid in paying our dividend and hopefully when we cash in these crops that are growing, and right now they seem to be very good. At the end of the day, you don't know until it happens. And so we're going to keep going and doing what we're doing, which is being highly liquid and taking care of our existing company. And some people just don't believe in us, and I can't blame them.

Speaker Change: I had some real good friends in the farming business that have just had to quit because they ran out of money. So we've got to keep ourselves highly liquid and paying our dividend and hopefully when we cash in these crops that are growing and right now they seem to be very good.

Speaker Change: But at the end of the day, you don't know until it happens and so.

Speaker Change: We're going to keep going and doing what we're doing which is being highly liquid and taking care of our existing company and some people just don't believe in us and I can't blame them, it's been tough for all the farmers since then.

David Gladstone: It's been tough for all the farmers since that. pandemic that happened and really shut down the farming business for anything other than very stable crops. We are just going to continue to muddle our way through this and hopefully our bet on the crops in the ground and all of these are not things that we're planting they're trees that are already growing so we're just taking care of the trees. And at some point in time, you'll know you're here. singing a good song down here about how well things went.

Speaker Change: And they make that happened then really shut down in the farming business for.

Speaker Change: Anything other than very stable crops.

Speaker Change: We are just going to continue to muddle our way through this and hopefully are a bit on the crops in the ground.

Speaker Change: All of these are not things that we're planting their trees that are already growing so we're just taking care of the trees and.

Speaker Change: In some point in time, you'll know you're here is singing.

Speaker Change: Singing a good song down here about how well things went.

Rob Stevenson: So that's where we are. I hope that's OK for you. Alright, thanks guys, appreciate the time this morning.

Speaker Change: So that's where we are but that's okay for you.

Speaker Change: Alright. Thanks, guys. Appreciate the time this morning.

John Massocca: Okay, we have another question. Our next question is from John Massocca with B. Reilly Securities. Good morning. So maybe with that kind of cash balance in mind, you know, how are you thinking about I know you've relatively limited debt maturities for the remainder of 25, but you do have that term preferred out there at the beginning of 26. How are you thinking about financing that? I mean, is that something you could take out with additional asset sales? Would you potentially use some of the, you know, maybe kind of runway you have in terms of taking on more leverage to take that down?

Speaker Change: Okay.

Speaker Change: We have another question.

Speaker Change: Our next question is from John <unk> with B Riley Securities.

John: Good morning.

Speaker Change: Good morning.

Speaker Change: So maybe with that kind of cash balance in mind, how are you thinking about I need relatively limited.

Speaker Change: Maturities for the remainder of 'twenty five, but you do have that term preferred stock out there at the beginning of 'twenty six.

Speaker Change: What are you thinking about financing that and is that something you can take out with additional asset sales would you potentially use some of the.

Speaker Change: It may be kind of a runway you have in terms of taking on more leverage to take that down just kind of curious your thoughts about that particular instrument.

John Massocca: Just kind of curious your thoughts about that particular instrument.

David Gladstone: Well, we planned it out and we are going to make the payment, not worried about that, but the question is always how you do it, and if we use our cash, we lose some liquidity. We've got these banks that want to lend us money, but their prices are still high. So we're kind of sitting between those two decisions and trying to figure out which is the best way to go. We'll go through it. We've got plenty of room to do it.

Speaker Change: Well, we planned it out and we are going to make the payment not worried about that but question is always how you do it and if we use our cash we lose some liquidity.

Speaker Change: Got these banks that want to lend us money, but their prices are still high.

Speaker Change: So we're kind of sitting between those two decisions and trying to figure out which is the best way to go.

Speaker Change: We'll go through it we've got plenty of room to do it. It just means that we're pushing out the answer to the question of these eight farms for another year or two years I don't want to do that I'd, rather get back to leasing farms and letting that farmer make the big dollars rather than us putting up some money.

David Gladstone: It just means that we're pushing out the answer to the question of these eight farms for another year or two years. I don't want to do that. I'd rather get back to leasing farms and letting the farmer make the big dollars rather than us putting up some money and making the big dollars. I don't like that.

Speaker Change: And making the big dollars.

Speaker Change: I don't like the they.

David Gladstone: growing side of the business, I do love the leasing side of the business. So We're just going to keep doing that and hopefully things will work out. Right now it looks extremely good. Projections for the farms are. following exactly what we thought. We're still in good shape, so.

Speaker Change: Growing side of the business I do love the leasing side of the business so what.

Speaker Change: Or just kind of keep doing that and hopefully things will work out but right now it looks extremely good.

Speaker Change: <unk> for the farms are.

Speaker Change: Following exactly what we thought we were still in good shape. So.

David Gladstone: We'll let you know if anything happens, but I hate to see the people out there selling their shares because I think we're going to do well for the year.

Speaker Change: Well, let you know if anything happens, but I hate to see that people out there selling their shares because I think we're going to do well for the year.

Lewis Parrish: John, regarding your question about the Series D term preferred stock, $60 million and change, coming due in January of 2026. We're talking through a few options. It's likely, not guaranteed, but it's likely we'll have a couple more farm sales, so that's more cash on the balance sheet that could be used towards it. Depending on what interest rates are closer to that time, we could go that route. We have been talking with banks to refinance that, but as David said, the price for that is high. Honestly, it's not too much cheaper than the option that would result in if we just let it sit out there, the coupon would go from 5% to 8%, not something we want to do, but the current refinancing cost is not a whole lot cheaper than that.

John: John regarding your question about the.

Speaker Change: Hey, guys.

Speaker Change: Yeah, that's very detailed preferred stock 60 million in change coming due in January of 'twenty six.

Speaker Change: Yeah.

Speaker Change: Going through a few options.

Speaker Change: It's likely not guarantee but it's likely we'll have a couple more farm sales. So that's more cash on the balance sheet.

Speaker Change: Could be used towards it depending on what interest rates are towards closer to that time, we could go that route and we have been talking with banks to refinance that but as David said the price for that is high and it's honestly, it's not too much cheaper than the <unk>.

Speaker Change: The option that would result in if we just let it sit out there that the coupon would go from 5% to 8% not something we want to do but.

Speaker Change: Our current refinancing cost is not a whole lot cheaper than that and of course, you have a lot of upfront commissions and costs involved in that transaction as well. So we have a few different options that we're looking at.

Lewis Parrish: Of course, you have a lot of upfront commissions and costs involved in that transaction as well. We have a few different options that we're looking at. But it's too early to make a decision on which route we want to go, but it is in the forefront of our minds.

Speaker Change: But it's too early to make a decision on which route we want to go but it is in the forefront of our minds.

Lewis Parrish: And just as a reminder, how long could that sit at 8% if you did decide to just let it roll forward? wherever it turns into perpetual. Okay, perpetual. Okay. And perpetual for three to five years. Okay.

Speaker Change: And just as a reminder, how long could that 8%. If you didn't decided just let it roll forward.

Speaker Change: Wherever it turns into perpetual perpetual perpetual preferred at that point.

David Gladstone: And then, kind of bigger picture, how are you thinking about the bank's groundwater, you know, both in terms of maybe adding to that and what you have, you know, kind of currently tucked away, just given where kind of market dynamics are. I mean, right, it's kind of a, obviously, security policy with kind of traditional drought in some of these western markets, but we've had some wetter winters. So, just curious, kind of your thoughts about, you know, your bank's water holdings, adding to it, selling out of it, etc.

Speaker Change: Okay and then.

Speaker Change: Kind of bigger picture, how are you thinking about the bank groundwater.

Speaker Change: Yeah.

Speaker Change: Both in terms of maybe adding to that and what you have.

Speaker Change: Currently tucked away.

Speaker Change: Just given where kind of market dynamics are I mean, it's kind of ours.

Speaker Change: I was just security policy with with kind of traditional drought and some of these western markets, but we've had some wetter.

Speaker Change: Winter. So just curious kind of your thoughts about your bank water holdings, adding to it you're selling out of it et cetera.

David Gladstone: Well, we have one situation in which we're probably going to add to it. Right now, we have enough water to do whatever we want to do this year. Everything's turned just total against us, but I think we're in great shape, and I think the water situation is going to be good for us. You know, all of that water is in the ground and we get our name on it and we pump it out whenever we need it. We haven't needed any of that water. It's been a relatively wet year and I don't think there's going to be much change, but the weather can blindside you easily by coming in really strong.

Speaker Change: Well, we have one situation in which you are probably going to add to it.

Speaker Change: Right now we have enough water to do whatever we wanted to do this year unless everything's tearing just totally against us, but I think we're in great shape and I think the water situation is going to be good for US you know all of that waters.

Speaker Change: In the ground and we get our name on it.

Speaker Change: At whenever we need it when you haven't needed any of that water. So far it's been a relatively wet year.

Speaker Change: And.

Speaker Change: I don't think there's going to be much change, but you know the weather can can blindside you easily buy coming in really strong and we had.

David Gladstone: And we had so much water come in. The amount of snow that's in the mountains that will melt this summer is... You know, better than it was last year, so this year should be a good year. And I don't worry about water nearly as much as I worry about what the Federal Reserve is going to do with interest rates, because with interest rates high, I mean, we borrow money at 3%, and most of our long-term debt is at 3%. So it would be nice if we could go back to that level. And this is farmland.

Speaker Change: So much water coming in.

Speaker Change: The amount of snow that's in the mountains that will melt this summer is.

Speaker Change: You know better than it was last year. So this year should be a good year.

Speaker Change: And I don't worry about water nearly as much as I worry about what the federal reserve is going to do with interest rates because with interest rates high.

Speaker Change: We borrow money at 3% and most of our long term debt is at 3% so.

Speaker Change: It would be nice if we could go back to that level and this is farmland.

David Gladstone: lending, and we don't have any problem with the lenders.

Speaker Change: Lending and we don't have any problem with the lenders lenders that are willing to lend I suggest they can't learn much below what they're being charged by the fed in by the government. So if you got any strange to pool all of them and for the Federal reserve because all the farmers need.

David Gladstone: The lenders are willing to lend, it's just they can't lend much below what they're being charged by the Fed and by the government, so if you've got any strings to pull, pull them in for the Federal Reserve because all the farmers need help this year and in the future. It's very expensive to borrow 8% money and use it to plant crops. Everything is pretty much stalled. There are a lot of people who would like to sell their farms, and I would love to buy them because prices are good, but at the same time, you can't borrow it.

Speaker Change: This year and in the future its very expensive to borrow 8% money and use it to plant crops. So.

Speaker Change: Everything is pretty much stalled there a lot of people, who would like to sell their farms and I would love to buy them because prices are good but at the same time you can't borrow it.

David Gladstone: You'd need an enormous amount of equity in order to wade into the marketplace.

Speaker Change: Need a normal amount of equity in order to Wade into the marketplace today.

David Gladstone: Okay, that last comment in mind, it's not a very specific level. Are you seeing anything loosening up in terms of transactions in the California kind of permanent crop market? It seems like that was kind of stuck. Given some of the prices of tree nuts, you know, over the last couple of years, but anything kind of opening up a little bit here is, you know, operators are kind of. digested the distress of the last couple of years. Well, prices for almonds, for example, have come up substantially from last year, and pistachios seem to be holding their own and making money for people that are farming those.

Speaker Change: Okay, so andrew or that kind of a lot, but that last comment in mind.

Speaker Change: It's not a very specific level are you seeing anything loosening up in terms of transactions in the California kind of permanent crop market. It seemed like that was kind of stuck.

Speaker Change: Given some of the prices of tree nuts, you know over the last couple of years, but anything kind of opening up a little bit here is.

Speaker Change: Operators are kind of.

Speaker Change: Digested distress over the last couple of years.

Speaker Change: Well prices for all months for example, or have come up substantially from last year, and pistachios seem to be holding their own and making money for people that are farming those and.

David Gladstone: We do have some wine grapes, and that's not a good market to be in right now, but we're getting along. And I think for us, as long as the pistachio market continues to grow, it's going to be It's good. We're going to be fine.

Speaker Change: And we do have some wine grapes and that's not a good market to be in right now, but we're getting along and I think for us as long as the stash air market is good we're going to be fine.

David Gladstone: Would you look at that market kind of got a little better? Would you like to sell any of your assets in that kind of specific area? Yeah, we've talked to a lot of brokers, there's a unfortunately. The past two years have been really bad for farmers. There are a lot of farms for sale. We've seen bankruptcies right and left. Farmers who were too highly leveraged and couldn't make their payments so the banks end up with those. We could get some great deals if we had cheap money to buy it. I'm not going to go down that path.

Speaker Change: Would you look at that market kind of got a little better would you look to sell any of your assets in that kind of specific area.

Speaker Change: Yeah, we've talked to a lot of brokers there as well.

Speaker Change: Unfortunately.

Speaker Change: Past two years have been really bad for farmers and.

Speaker Change: There are a lot of farms for say Oh, we've seen bankruptcies right and the left farmers, who are too highly leveraged and couldnt make their payments of the banks and those.

Speaker Change: We could get some great deals if we had cheap money to buy it I'm not going to.

Speaker Change: I'm going to go down that path, we've got enough money to do what we need to do for the next years.

David Gladstone: We've got enough money to do what we need to do for the next years. And I think we're just going to stay and keep doing what we're doing. Pretty boring for everybody except... Yes, people who are hoping our stock will go down even further, so. Other than that, we're in good shape.

Speaker Change: I think we're just gonna stay and keep doing what we're doing.

Speaker Change: Yes.

Speaker Change: Pretty boring for everybody except.

Speaker Change: I guess people, who are hoping our stock will go down even further so.

Speaker Change: Other than that we're in good shape.

David Gladstone: Yep, that's it for me. Thank you very much. Joe. Anybody else? No other questions?

Speaker Change: Okay. That's it for me thank you very much.

Speaker Change: Hey, Joe anybody else.

Speaker Change: Other questions.

David Gladstone: Well, I hate to say it and leave it where it is, but we don't have any better information for you. So, as a result, we're going to close it out. See you next quarter. We've got the money to go to next quarter, and the quarter after that, and even the quarter after that. And as long as we don't have complete disaster like they had in 2009, that would be able to... to just stick around and wait it out and if we hit the ball out of the park as we hope to do with our eight farms. We're going to be able to say some nice things to you next time.

Speaker Change: I hate to say it and leave it where it is but we don't have any better information for you. So as a result, we're going to close it out.

Speaker Change: See you next quarter when you've got the money to go to next quarter and the quarter after that and maybe even the quarter after that and it long as we don't have complete disaster like they have in 'twenty.

Speaker Change: That would be able.

Speaker Change: We're able to.

Speaker Change: To just stick around and wait it out and if we hit the ball out of the park as we hope to do with our eight farms.

Speaker Change: We're going to be able to see some nice things to you in next time. So that's the end of this call.

So that's the end of this call. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.

Speaker Change: Okay.

Speaker Change: No.