Q2 2025 Farmland Partners Inc Earnings Call

Good morning ladies and gentlemen and thank you for standing by. My name is Calvin and I will be your conference operator. Today at this time, I would like to welcome everyone to the Farmland Partners Inc, Q2 2025 earnings call all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 1 again, thank you. I would now like to thank the call over to Luca fabri, president and CEO please

Luca Fabri: Go ahead.

Luca Fabri: Thank you guys, and thank you, everybody and good morning. Um, thanks for joining us today. For this second quarter 2025 earnings conference call and webcast. Um, I will uh, uh, we will start as usual with some uh, customer preliminary remarks from our general counsel, Christine Garrison, Christine.

Christine Garrison: Thank you, Luca, and thank you to everyone on.

Christine Garrison: Opportunities as well as comments on our outlook for our business runs and the broader agricultural markets. We will also discuss certain non-gaap Financial measures, including net. Operating income, SFO adjusted, ffo IBA re and adjusted ibida. Re definitions of these non-gaap measures as well as reconciliations to the most comparable. Gaap measures are included in the company's press release. Announcing second quarter, 20125 earnings, which is available on our website, farmland partners.com and is furnished as an exhibit to our current report on Form 8K data. July 23rd, 2025 listeners are cautioned that these statements are subject to certain risks and uncertainties many of which are difficult to predict and generally beyond our control, these risks and uncertainties can cause actual results to differ materially from our current expectations and we advise listeners to review the risk factors discussed in our press release distributed yesterday. And then documents we have filed with or furnished to the FCC that would now like to turn the call to our executive chairman Paul Pitman Paul.

Paul Pitman: Thank you Christine uh my comments will be relatively short this morning. I'll be your course available in the Q&A. Um this is a very good quarter for us land values of continued to stay strong in the midwest. As is demonstrated by the gains on the asset sales we made. Uh in that geography, we also have now liquidated nearly all of the portfolio that we owned in Colorado.

Paul Pitman: Uh, we still have a very modest exposure there, uh, 1 cattle, feed lot that we still own as well as a a just a handful of of row, crop farms. Um we you know, as is we talked about several months ago and several years ago, long-term water concerns on the Eastern Plains of Colorado. Drove us to decide to exit the market. I'm happy to say we did exit the market with substantial gains on sale.

Speaker Change: Uh California uh is still struggling um you will you see and I'm sure in the press release that we took a right down on a handful of farms out there. Luca will address this a little more uh in his comments. Um, you know our position when we think about right Downs.

Speaker Change: Is really that we are long-term investors. So as long as we think of farms value, uh, we'll recover, we're not concerned about, uh, you know, some given far, you know, given, uh, Farm in our neighborhoods, sold high or sold low. It doesn't really affect our our direct thinking about the value of our Farms. We think about most of our farms and what is the value, you know, in a 2 to 5 year or longer time frame

This group of farms, though that we took the right Downs on, we had reached a point where we believed that due to the crop types, um, and the fact that they are specialty crops and the water, uh, issues in the region that we needed to take a right down and so, we did, and what happens here just in a kind of Common Sense. Way is particularly on specialty, crop farms the idea that you can wait forever for, uh, recovery. Uh, of value is just not true in row in traditional row. Crop long-term appreciation, will always help you out.

Speaker Change: The problem you have in specialty crops is that while you're waiting the trees on the ground are aging out, so you're losing a year of productivity, every year, you rate you wait and you're going to have to, you know, bulldoze those trees out and replant them. And so, those factors led us to take this right down. As I said, Luke will talk a little more about it. We can touch that in the Q&A.

Speaker Change: The other thing I want to address uh just briefly because it's been in the it was in the press as recently as the last couple of days is this idea uh that Coca-Cola is going to replace a high fructose corn syrup with um a regular cane sugar syrups uh as it as the sweetener in Coca-Cola. And you know, what does that mean to the marketplace? What does it mean? Uh,

Speaker Change: To Corn markets, so on and so forth. So, a couple of kind of important facts.

Speaker Change: Stream the entire high fructose corn syrup Market is pretty small as well as a percentage of the overall corn production.

Speaker Change: Um, now just to the science of it for a second. Um, certainly my view is that there's never been any really credible research that the T, you know, the, the type of sweetener has, you know, significant meaningful measurable impacts on health outcomes. Uh, you know, the percentage of glucose fructose and sucrose are modestly different in the different types of sweeteners.

Speaker Change: But the, um, but there's really no difference, you know, no research that shows any kind of Health difference between those types of sweeteners. The fundamental issue is that we probably all eat too much sugar, period, no matter what the form. Um, so hopefully this doesn't turn into a significant thing. Uh, even if you know, in the because science will dominate, uh, in

Speaker Change: At least for most food products, uh, you know, that the what the high fructose corn syrup is, is an incredibly low cost source of sweetening um much cheaper than cane sugar in most cases. Uh and so hopefully like I said the science kind of wins here even if it doesn't. Uh you know I think the point is it's just not that big a piece of the Corn Market with that. I'll turn it over.

Speaker Change: Do you Luca to make you a comments?

Luca Fabri: Uh, thank you boy and just to add a couple of kind of finer points to the this last topic that Paul was addressing, um, Coca-Cola is proposing to not replace its regular product based on the chcs but to add a new product, um, that, uh, users can sugar. And by the way, in most grocery store your stores, you already can find that product. It's called, you know, typically referred to as Mexican Coke or Mexican Fanta because it's, it's comes from the companies manufacturing facilities in, in in Mexico. They use cane sugar. The other important thing they have to think of think about, is that still, this is a product that comes from agriculture, comes from as produced on farmland, and that's still, you know, in the overall picture of Farmland as an asset class, uh, this is reconfirming that even with shifting consumer preferences from 1 product to another, whether it's hfcs Coke versus cane sugar Coke or organic versus, um, tradition,

Traditional, uh, you know, fruits and vegetables.

At the end of the day, everything comes from Farmland and that strengthens the value proposition of Farmland as an asset class, which I'll return to as a point here in a minute. Can I going back to the performance of the company in the last quarter in specifically? Uh, as Paul mentioned we we have completed uh some additional um asset dispositions, you know, yesterday so far we've sold about 80 million dollars.

Luca Fabri: In in assets, realizing gains of approximately 25 million dollars. Uh and as Paul was saying, mostly these sales were in the high plains, which is a region that we intended to exit, uh, you know, long-term anyway. Uh,

This time, we also solved some, um, mostly uh, Class B soil farms, uh, in Illinois. So not the uh, top of the, uh, kind of quality scale that, you know, within our portfolio in the Cornell, uh, 1 thing that I wanted to highlight is that the buyers in the 2 major transactions that we've done so far this year were family offices. Uh these are uh super ultra high net worth individuals and families uh that have access to all sorts of assets and investment deals and so on and so forth. And they are choosing to put their money in farmland and this really strengthens the, uh, the value of of Farmland. As both. A very reliable long-term store of value as well as a long-term appreciation play. Uh, and this goes back to our kind of the reason why we started our company years ago.

Luca Fabri: Which is to make this asset class accessible not only to high networked individuals. Uh but also to uh everyday kind of everyday investors like the the vast majority of our investor base.

Luca Fabri: In these stock purchases. The last point, I want to do discuss is pro vention, um, this quarter. We do a relatively unusual step of, um, recording some impairments on some of our Farms specifically, these were 4 farms in California and the vast majority of those 16.8 million dollars in impairments were on 2. Very specific Farms 1 is a pistachio Farm.

Luca Fabri: that has a, um,

Luca Fabri: Kind of very delicate water situation. Delicate not from a physics and physical availability of water uh standpoint necessarily mostly from a regular regulatory standpoint. Meaning that because of California regulations on water access this far would be progressively more and more challenged in accessing the um in being able to use water to the extent necessary to support production uh you know, Farm wide.

Luca Fabri: Um, and which is why we we decided to take this impairment because we don't see this this um um um this this this water situation resolving at all, even though it's regulatory driven. Uh the other 1 is a much uh smaller Farm our only uh Walnut Farm in our portfolio. Um and there in addition to the regulatory water uh, issue that uh, led to the payment of the first Farm. We also had a longer term view that walnuts as a crop um, are um, in a Del

Position, especially in the US, given the significant production worldwide that has emerged in China and therefore, has made that that crop relatively less attractive as an investment in the US and we don't see that situation resolving itself.

Speaker Change: Um, those are all the comments I wanted to um, to highlight. So with that, I will now turn the call over to our Chief Financial Officer. Susan landi for her overview of the company's financial performance, Susan.

Susan Landi: Thank you, Luca. I'm going to cover a few items today including a summary of the 3 and 6 months. Ended June, 30 2025, a review of capital structure, comparison of year to date revenue and updated guidance for 2025.

I'll be referring to the supplemental package, which is available in the investor relations section of our website under the subheader events and presentations.

Susan Landi: First, I'll share a few Financial metrics that appear on page 2.

Susan Landi: For the 3 months, ended June 30 2025, net income was 7.8 million or 15 cents a share. Um, available to come and shareholders, Which is higher than the same period for 2024. Um primarily due to gains on dispositions of 32 properties during the current quarter, uh in addition to lower GNA uh costs and interest expenses and higher interest income,

Susan Landi: Asfo was 1.3 million or 3 cents per weighted, average share Which is higher than the same period of 2024 afo was positively impacted by significantly lower interest expense. As a result of our debt, reductions

Susan Landi: And higher interest income due to increased activity under the FBI Loan program.

Susan Landi: For the 6 months, ended June 3020 25. Uh net income was 9.9 million.

Susan Landi: Uh or 18 cents, a share available to Common stockholders Which is higher than the prior year. Would largely do the impacts of 34 dispositions that occurred in the current year to date period. Um in addition to significant debt reductions resulting in interest, savings lower GNA expenses as well as interest, increased interest income due to a higher balance on loans under the FBI Loan program.

Susan Landi: Afo was 3.6 million or 8 cents per weighted, average share.

Susan Landi: Which is higher than the same period for 2024 afo was positively impacted by lower interest expense higher interest income uh and proceeds from a solar lease arrangement with a tenant.

Susan Landi: Next, we'll cover some operating expenses and other items that you can find on page 5 gain on, disposition of assets is higher, um, due to the dispositions of the 34 properties in 2025, uh, that had an aggregate consideration of 81.6 million, resulting in a net gain on sale of 25 million uh, compared to a loss of 0.1 million in 2024, which was related to the sale of fixed assets. There were no property dispositions in the first half of 2024.

Susan Landi: In addition, the dispositions resulted in lower property, operating expenses and depreciation expenses.

Susan Landi: General and administrative expenses decreased for the 3 and 6 months, ended June 30 2025 primarily, uh, due to a 1-time severance expense of 1.4 million, uh, during the the 6-month period in June of 2024, which is partially offset by slight increases in other expenses in the current period.

Speaker Change: Moving on to page 12, there's a few capital structure items that I'd like to point out.

Speaker Change: uh, we had undrawn capacity on the lines of credit of a of approximately 160 million dollars as of June 3020 2025

Speaker Change: We had no debt subject to interest rate, resets in 2025. And as a result of our swap, um, no exposure to variable interest rates uh, with the exception of whatever we draw on our line of credit.

Speaker Change: In addition, we have repaid our lines of credit in full with payments totaling, 23 million in early July.

Speaker Change: Uh, page 14 will break down the different Revenue categories then um, along with some comments at the bottom to describe the differences between those periods. Um, a few points to highlight are, um, as expected far fixed Farm rent, decreased largely due to dispositions in the last half of 2024 and thus far in 2025.

Solar wind and Recreation changes were caused primarily by um, proceeds from the solar Revenue sharing arrangement with the tenant, uh, that we received in the first quarter of 2025 and it's partially offset by disposition.

Speaker Change: Uh, management fees and interest income increased primarily due to the increased um, loan activity, under the FBI Loan program.

Speaker Change: Page 15 has our outlook for updated outlook for 2025 the confine, the assumptions listed at the bottom of the page on the revenue side changes from the May guidance include the, the expected decrease in fixed Farm rent as well as solar wind and Recreation rent. Due to property dispositions that occurred in the current period.

An increase in management fees and interest income. As a result of increased activity on the FBI Loan program and changes. In variable payments, crop sales and crop insurance. As a result of updated outlook on properties with variable rent and properties that we directly operate.

Speaker Change: On the expense side changes from the May guidance include an increase in impairment related to the current period impairment expense for uh, certain properties in the West Coast.

Speaker Change: An increase in the gain loss on disposition of assets, due to the 32 property. Dispositions that closed in Q2 a decrease in interest expense due to a lower average out balance outstanding.

Speaker Change: Um, on the debt as a result of principal repayments during the current quarter and subsequently in July. Uh, and a decrease in weighted average shares related to the impact of the share repurchases that we've made since May.

Speaker Change: The forecasted range of afo is 12.8 million to 15.5 million or 28 cents to 34 cents per share.

The summarizes where we stand today, we will keep you updated as we progress through the year. This does wrap up our comments for this morning. Thank you all for participating, operator. You can now begin the Q&A session.

Thank you.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session at this time I would like to remind everyone to ask a question. Please press the star button, followed by the number 1 on your telephone keypad. You would like to visit your question. Please press star 1, again 1 moment, please for your first question.

Your first question comes from the line of Robert Stevenson. It's Jamie. Please go ahead.

Speaker Change: Good morning guys. Um Luca how

Speaker Change: Much more. Can you guys sell in 2025, given the multi-year disposition program that you guys have been operating under?

So, so far this year with uh, we actually have done 3 trans, uh, you know, sale transactions, uh, that counts under the, uh, re rules. So we are, uh, we have 4 more transactions. So we are really relying this year on, uh, the Safe Harbor based on 7 trans rather than the dollar amount. Um, because of the prior history on, uh, on sales and therefore the total dollar amount will, of course, Very Much depend on the potential size of each of those remaining for transactions. Assuming that we do all 4,

Speaker Change: Okay. And if you do all 4 of those is that trending towards needing to pay a special dividend again, at the end of the year this year.

Speaker Change: The, uh, gaping counting and tax accounting. Uh, for example, if we end up selling some of the Farms where we, where we recorded, uh, impairments, those impairments will turn into tax, uh, and we'll have a tax impact. And so, um, it's it's really hard to tell at this point.

Okay, and then, I guess the opposite side of that coin. How are you guys thinking about Acquisitions? Does anything really make sense at this point? Um, especially girls versus repaying debt and buying back stock. How are you guys thinking about Capital deployment in the back half of this year?

Speaker Change: Let me look, I'll take this 1. So as far as as capital employment goes raw, we are uh, you know, very disciplined, in terms of acquisition strategy, right now. Uh, you know, but a a farm that, you know, a joins, something we already own comes up, uh, or an, especially good bargain for some reason, um, comes up, you know, which certainly look at it. Um, but we are, you know, we're pretty slow in terms of our

Speaker Change: Our pursuit of acquisition opportunity for the reasons you stated uh buying back. Stock is a more, uh, as most cases more effective. You know, we're still long-term Believers as you can, as you can see, with what we've done in the last year, or year or 2, we are much much more concentrated on the US. Uh, Midwest. Uh, Illinois.

Particular part of the marketplace that gives us a, you know, much, much safer and more stable portfolio than than we have had in the past. Um, you know, the only downside is its relatively low current yield, uh, because cap rates in that margin in that region. Because of the safety are, you know, are pretty low. Uh, but the long-term appreciation in that region is better than anywhere else. And so, uh, you know, long-winded answer, but, we're just not very inquisitive and not likely to be

Susan Landi: Okay um Susan, the legal and accounting. Guidance went up about 300,000 at both the low and high end um anything major driving that increase.

Again, I'll I'll, I'll, I'll just address that not nothing really significant. We have an ongoing tenant dispute, uh, in on a Louisiana Farm, uh, from, from long ago and, you know, not what we don't believe we did anything wrong. Uh, we've never been, you know, never had 1 of these disputes in the past. With that being said, we thought it was appropriate to to kind of EX expect to pay some money at some point in the future, uh, because you know, we'll probably probably settle it at some point. So that that's what's driving that

Speaker Change: All right. And then the last 1 for me, um, the preferred units are eligible for conversion and a little over 6 months. Any thoughts at this point on how you guys might address those

Speaker Change: Yeah, there will be almost no chance that we convert those, uh, industry shares given that our stock is so deeply. Undervalued, we will, we will pay that off, uh, either with cash. Uh,

Speaker Change: From asset sales or uh, from borrowings under our lines of credit there. There is no. Uh, you know, I shouldn't probably say 100%, so there's a 99% probability. That that is not going to be converted converted.

Speaker Change: Okay. Thanks guys. I appreciate the time this morning.

Speaker Change: Your next question comes from the line of credit with Cassara of lucid Capital markets. Please go ahead.

Yeah. Hey, good morning guys. Um, I want to Circle back to the pickup and variable payment expectations. Um, was that entirely due to sort of an improved outlook on the Citrus and avocados? Or did you restructure any leads that have a larger variable payment component, like 1 of your competitors has been doing?

Speaker Change: Susan or Luca you need to take that. I don't know the specific facts. Yeah. No, no we haven't uh restored. We haven't had the, the need to restructure, uh, any um, Visa Arrangements. Um, so it's just uh, essentially based on crop Dynamics and as we refine our uh, views uh, throughout the year, we have a better view on crop yields and crop prices. Susan, I don't know if there is anything else you want to add.

Speaker Change: Uh no, I don't have anything else.

Speaker Change: Okay, that's helpful. Um, changing gears, you know, we're hearing more and more about some tighter lending, uh, to Farmers and, you know, your loan portfolio is nearly triple, you know, since the third quarter of last year are are you seeing Rising demand and and is there a sealing on what that portfolio might be as a percentage of assets?

Speaker Change: Um, you know, there's we're in a, uh, you know, we're in a somewhat difficult. I won't say very difficult, but somewhat difficult operating environment for Farmers, uh, for row crop farmers in particular, um, you know, so so we would expand the that lending program, you know, if there were good loans to make modestly, uh, that being said, uh, you know, we don't want that to become too big a percentage of our portfolio at any point in time. Uh, just because it's, it's, you know, our Core Business is owning Farmland. Not

Speaker Change: Loans.

Speaker Change: We like that business. We like the loan business because of the returns. Uh, it certainly helps us uh generate uh cash flow for dividends and operating overheads, but we're we're not likely to expand it significantly now.

Speaker Change: Okay, got it.

Speaker Change: Uh, I want to Circle back to the impairment charges. You took in California, um, kind of the back of the envelope. Looks like it was about 6% of your sort of total cost basis there. Uh, but you mentioned most of it was at 2 Farms. Can you give us a sense of what the right down was on a percentage basis at those Farms?

Speaker Change: Is it somewhere in the order of 30% at at several?

Um, on 1 times where we could? Yeah,

Speaker Change: The on 1 Farms where we took the majority of that impairment was actually um a little over 50%, you know, we were okay, very aggressive. We want to just take, you know by the bullet once to be honest.

Speaker Change: Uh, Susan, I don't know if you want to, she have handy, the the details, that's the 1. I remember off the top of my head. Yeah. Uh, they're both in the neighborhood of about 50 percent the, the 2 large ones.

Speaker Change: Got it. Okay, that's helpful. Yeah when you let me just add to that. When, when you see the regulatory environment fundamentally take away.

About half of your water.

On a California Farm.

Speaker Change: It is incredibly detrimental to the value.

Speaker Change: And you know that's what's going on out there.

Speaker Change: And so that's we took, you know, we pretty significant write Downs on those.

Got it.

Just 1 more for me. I mean, just giving you took the charges. Um, I know you look longer term 2 to 5 years or even longer. Um, are you, are you actively looking to sell some farms in California and is there a bid?

Speaker Change: Yeah. There's um yeah, we are actively looking. We've got a couple of the Farms. We took the impairments on actually listed uh and we're trying to see if we can get them sold. Uh because we just you know, when we when we when we decide a farm isn't going to uh you know, I I you don't want to day trade if you will Farmland, that's not how to do it. Uh, you don't even want a yearly, trade farmland.

What you want to do is is is basically hold for long-term appreciation potential. But once you decide that, you know, something's something's in trouble and going to stay in trouble for a meaningful period of time, you know, a half.

A decade or more uh and you're losing money on it, owning it and when you think about your cost of capital and everything else, you just got to get rid of it. And so we're going to we're going to get rid of it. And yes, there are bids out there. You just have to be disciplined on not asking too much.

Speaker Change: Um, you know, I think, I think some investors are unwilling to do what we did and just take the right down and then re-priced the asset and see if you can move it.

Speaker Change: Got it. Okay, that's it for me. Thanks.

Speaker Change: Your next question comes from the line of trauma, SOA, B, Riley security. Please go ahead.

Good morning.

Speaker Change: Morning. So if I kind of look at your outlook,

go ahead, can I look at the full your outlook right? You know not that they were huge moves but variable payments kind of increased versus your last provided guidance and crop sales. You know, came down a little bit and I'm guessing is I imagine that just, uh,

Uh, crop type mix and and maybe can you provide any color on on kind of how, you know, the various pushes and pulls are there in terms of crop type, you know what's doing well, what's doing poorly and inmate? Maybe kind of, you know, um, why

Speaker Change: Variable payments is of course crop. Share leases or bonus leases in in California.

So what happens on that once a quarter review is the crop, you know, you start with a good face budget, Faith budget based on, you know, what happened last year and what happened in the average of The Last 5 Years, etc, etc. And then you refine it as you get into the crop season and then you actually can see the fruit on the tree. And so, all that's happening here is we're seeing certain types of farms, do a little better than we expected. Uh, in the second quarter in particular, you see this Citrus Harvest, get get essentially completed. It goes on in the first and second quarter, uh, you now can look at the tree nuts, which are a late summer or early fall harvested. Crop. Uh, you can start, uh, seeing whether you've got a really, you know, high volume of nuts on the tree or not. So on and so forth. And we make, you know, some adjustments and and budgeting updates based on that. And that's what's driving that those, those numbers.

Speaker Change: That that makes sense. Um, maybe on California specifically, how much kind of, um, you know, uh, yeah, how long was kind of the Outlook into some of these water issues and some of the Farms,

Speaker Change: Uh you took the right down in and I guess are there any other farms in the portfolio today that are at risk of of kind of having some of these issues with access to water, just given the regulatory change or is it something that's? I guess kind of how sudden is it and how you know you know how much kind of um

Speaker Change: You know how far over the horizon can you see when some of these uh water regulatory issues are going to occur?

Speaker Change: Well so on the water regulatory issue. Its most of this is based on a on on what's called Sigma which was a groundwater management uh law that was put into place um you know 4 or 5 years ago now

and then as and the implementation of Sigma uh is largely based on water districts or counties, you know, kind of smaller subunits not the whole state coming up with plans. As those plans are developed you basically hopefully get to a point in which you got maybe a a worse water situation than you used to have uh based on the regulations. But at least you now have predictability and certainty. So that process, you know, is is largely well underway in most water districts and counties in California. So what we were seeing here and like take the the the in particular, the pistachio Farm, um, what came out of that regulatory process and that water district process.

As it came to the final rules related to the signal law.

Speaker Change: Uh, was in a pretty negative and that's why we took that big right down on the on the pistachio Farm. Um, so so the, so the, you know, if we believe there was a, a need to write something else down, we would have already done it. Um, so you know, hard to answer, uh, with, with a, with, with certainty. Um, but, you know, we don't see anything. We're going to write down right away. Uh, where we would have done it now? Um, I can't tell you because it's this whole Sigma thing is probably 75%, done, not 100% done at this point. Uh, what other, you know what other sort of turn may occur. That leads us to need to write something down. But right now we don't see any need to.

Speaker Change: Okay, and when you say like, you know, you're using rough numbers but the sigma things about 75% done, is that like 75% of water districts, kind of already have their plans in place? Or is that something or we see a wave of? Yes, that's that's that's that's what I meant by that.

And, and then last 1, that's on the balance sheet. You know, how should we kind of think about utilization in the 50 million dollars of cash, you kind of have on hand today? Just giving, you know, you know, prior comments on the series a, um, versus maybe, you know, the attractiveness of buying back stock versus debt. I mean, I'm just this kind of thinking, like, you know, is, is there potential that you carry a relatively large cash balance through the remainder of the year, just giving um, the preferred unit

Speaker Change: You know, potential need to repay the preferred units next year.

Luke. I'm going to turn that over to you because you you you you want to talk about that all the time.

Speaker Change: Opportunities on specific, you know, pieces of that. So, for example, of the 50 AUD million dollars that we have on the balance sheet as of the end of the quarter, we already use some to pay down uh, lines of credit. So now we don't have any expenses we expensive, uh, that outstanding uh at this point in time. Um, so it's it's um, I know it's not the the clean answer that you can plug into your model but unfortunately the world is not as clean and straightforward. It's just an optimization model that we we run in our discussions on an ongoing basis.

And I think the 1 that's the 1. Let me just add 1 thing to that because it's important right now we're investing that cash at a positive spread above what the cost of the preferred is

Speaker Change: So just sitting on a bunch of cash kind of waiting to pay off that preferred or next year. You know is actually making us a little bit of money right now.

Um, so you know, just that's that's worth keeping in mind.

Yep. Understood uh and that's it for me. Thank you very much.

Speaker Change: There are no further questions at this time with that, I will turn the call back to Luca fabry for closing remarks. Please go ahead.

Thank you developing. Uh we appreciate your interest in our company. Uh thank you again for joining us today and we look forward to updating you on our activities and results in the coming quarters, have a good rest of your day.

Speaker Change: Ladies and gentlemen, this concludes today's conference call. We thank you for participating and ask that you, please disconnect your lines.