Gladstone Land Announces Third Quarter 2016 Results

MCLEAN, Va., Nov. 14, 2016 (GLOBE NEWSWIRE) -- Gladstone Land Corporation (NASDAQ:LAND) (the "Company") today reported financial results for the third quarter ended September 30, 2016.

A reconciliation of funds from operations ("FFO"), Core FFO ("CFFO") and Adjusted FFO ("AFFO"), all non-GAAP (generally accepted accounting principles in the United States) financial measures, to net income, to which the Company believes is the most directly-comparable GAAP measure for each, and a computation of fully-diluted net income, FFO, CFFO and AFFO and fully-diluted net income per weighted-average share is set forth in the Summary Information table below, and a description of each of FFO, CFFO and AFFO is located at the end of this press release.  In addition, a description of net asset value ("NAV"), a non-GAAP financial measure, and a reconciliation to total equity, to which the Company believes is its most directly-comparable GAAP measure, is also located at the end of this press release.  All per-share references are to fully-diluted, weighted-average shares of common stock of the Company unless otherwise noted.  For further detail, please refer to the Company's Quarterly Report on Form 10-Q (the "Form 10-Q"), filed today with the U.S. Securities and Exchange Commission (the "SEC"), which can be retrieved from the SEC's website at www.SEC.gov or from the Company's website at www.GladstoneLand.com.

Please note that the limited information that follows in this press release is not adequate for making an informed investment judgment.

Summary Information:
      For and As of        
      the Quarters Ended   Change   Change
      9/30/2016   6/30/2016   ($ / #)   (%)
Operating Data:              
Total operating revenues $   4,469,174     $   4,244,441     $   224,733       5.3 %
Total operating expenses, net of credits     (2,663,340 )       (2,650,404 )       (12,936 )     0.5 %
Other expenses, net     (1,771,233 )       (1,478,177 )       (293,056 )     19.8 %
Net income available to common stockholders and OP Unit holders $   34,601     $   115,860     $   (81,259 )     -70.1 %
Plus:  Real estate and intangible depreciation and amortization     1,431,846         1,334,973         96,873       7.3 %
FFO available to common stockholders and OP Unit holders $   1,466,447     $   1,450,833     $   15,614       1.1 %
Plus:  Acquisition-related expenses     122,841         24,648         98,193       398.4 %
Plus:  Acquisition-related accounting fees     50,500         12,900         37,600       291.5 %
CFFO available to common stockholders and OP Unit holders $   1,639,788     $   1,488,381     $   151,407       10.2 %
Net adjustment for cash rents (1)     (146,192 )       (66,606 )       (79,586 )     119.5 %
Plus:  Amortization of deferred financing costs     65,584         35,372         30,212       85.4 %
AFFO available to common stockholders and OP Unit holders $   1,559,180     $   1,457,147     $   102,033       7.0 %
                   
Share and Per-Share Data:              
Weighted-average common shares outstanding - basic and diluted   10,018,331       9,992,941       25,390       0.3 %
Weighted-average OP Units outstanding (2)   854,116       745,879       108,237       14.5 %
Weighted-average total shares outstanding   10,872,447       10,738,820       133,627       1.2 %
                   
Diluted net income per weighted-average total share $   0.003     $   0.011     $   (0.008 )     -70.5 %
Diluted FFO per weighted-average total share $   0.135     $   0.135     $   (0.000 )     -0.2 %
Diluted CFFO per weighted-average total share $   0.151     $   0.139     $   0.012       8.8 %
Diluted AFFO per weighted-average total share $   0.143     $   0.136     $   0.008       5.7 %
Cash distributions declared per common share $   0.124     $   0.124     $   -        0.0 %
                   
Balance Sheet Data:              
Net investments in real estate, at cost (3) $   308,737,982     $   268,725,765     $   40,012,217       14.9 %
Total assets $   316,306,732     $   275,185,109     $   41,121,623       14.9 %
Total indebtedness (4) $   217,230,127     $   181,526,562     $   35,703,565       19.7 %
Total equity $   86,545,055     $   82,227,141     $   4,317,914       5.3 %
Total common shares + OP Units outstanding (2)   11,240,181       10,738,820       501,361       4.7 %
                   
Other Data:              
Cash flows from operations $  947,327     $   2,030,785     $   (1,083,458 )     -53.4 %
Farms owned   56       47       9       19.1 %
Acres owned   33,800       23,456       10,344       44.1 %
Occupancy rate   100.0 %     100.0 %     0.0 %     0.0 %
Farmland portfolio value $   379,983,991     $   337,171,991     $   42,812,000       12.7 %
Net asset value per share $   13.68     $   13.68     $   -        0.0 %
                               
(1) This adjustment removes the effects of straight-lining rental income, as well as the amortization related to above-market lease values and accretion related to below-market lease values, deferred revenue and tenant improvements, resulting in rental income reflected on a modified accrual cash basis.  The effect to AFFO is that cash rents received pertaining to a lease year are normalized over that respective lease year on a straight-line basis, resulting in cash rent being recognized ratably over the period in which the cash rent is earned.
(2) There were 1,215,306 and 745,879 OP Units held by non-controlling limited partners as of September 30 and June 30, 2016, respectively.
(3) Consists of the initial acquisition price (including the costs allocated to both tangible and intangible assets acquired and liabilities assumed), plus subsequent improvements and other capitalized costs associated with the properties, and adjusted for accumulated depreciation and amortization.
(4) Includes the principal balances outstanding of all borrowings, including mortgage notes and bonds payable and lines of credit, plus our Term Preferred Stock.
 

Highlights for the Quarter:
  • Property Acquisitions:  Acquired 9 new farms, consisting of 10,344 total acres, for approximately $40.4 million.  On a weighted-average basis, these farms were acquired at an initial, overall capitalization rate of 4.8%, with provisions within certain of the leases expected to drive that figure higher in future years;
  • Leasing Activities:  Renewed our final 2016 lease expiration (a property in Salinas, CA) with the existing tenant at a net increase in annualized income of 9.0% compared to that of the previous lease;
  • Financing Activities :
    • Obtained $4.1 million in new, long-term borrowings at an expected, weighted-average effective interest rate of 3.10%, which is fixed for seven years;
    • Issued $28.8 million of 6.375% term preferred stock, which is mandatorily-redeemable in five years (the "Term Preferred Stock"); and
    • In connection with certain acquisitions during the quarter, issued 469,427 units of limited partnership interests in our operating partnership ("OP Units") at a weighted-average price of $11.31 per OP Unit, constituting an aggregate fair value of approximately $5.3 million as of the acquisition date; and
  • Paid Distributions :  Paid monthly cash distributions of $0.04125 per share of common stock (including OP Units held outside of the Company) for each of July, August, and September, 2016.

Q3 2016 Results:  Net income for the quarter was approximately $35,000, or $0.00 per share, compared to approximately $116,000, or $0.01 per share, in the prior quarter.  AFFO for the quarter was approximately $1.6 million, or $0.14 per share, and increased by approximately 7.0% from the prior quarter, primarily due to additional rental income recorded as a result of our recent acquisitions and a decrease in the performance-based incentive fee earned by our adviser during the quarter, partially offset by additional dividend payments made on our Term Preferred Stock, which was not outstanding during the prior quarter.  We declared and paid distributions during the quarter of approximately $0.12 per share.

For the third quarter, our core operating expenses (which we define as our total operating expenses, less depreciation and amortization expense, acquisition-related expenses, any fee credits, and certain other one-time expenses) decreased by approximately $182,000, or 14.1%, from the previous quarter, primarily due to a decrease in the incentive fee earned by our adviser.  Excluding the incentive fees earned in each of the comparable quarters, our core operating expenses decreased by approximately $45,000, or 4.0%, from the previous quarter, primarily due to lower general and administrative expenses (due to writing off approximately $64,000 of bad debt expense in the prior quarter) and a decrease in stockholder-related expenses.  These decreases were partially offset by additional professional fees incurred in connection with the level of acquisitions we had during the quarter and for updating the valuations of certain of our farms via third-party appraisals.

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