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Sep 30, 2022
Gladstone Land Q3 2022 Earnings Report
Reported financial results for the third quarter ended September 30, 2022.
Key Takeaways
Gladstone Land Corporation reported a strong third quarter with increased AFFO and revenue driven by participation rents and fixed base cash rents. The company acquired new farms and executed new leases, contributing to the revenue growth. Despite economic concerns, Gladstone Land remains conservative with capital and is well-protected against interest rate increases.
Acquired four new farms and a 40-acre parcel for approximately $37.4 million.
Executed six new or amended leases expected to increase annual net operating income by approximately $281,000, or 9.8%.
AFFO increased by approximately $2.7 million, or 60.3%, from the prior quarter, with AFFO per common share increasing to approximately $0.21.
NAV per share increased by $0.96 from the prior quarter to $16.56 at September 30, 2022.
Gladstone Land
Gladstone Land
Forward Guidance
Gladstone Land anticipates acquisition activity to remain slow for the rest of 2022 and likely into 2023. The company is proactively securing water availability for its farms and is well-protected against further interest rate increases with over 99% of borrowings fixed for the next five-plus years. Gladstone Land expects strong demand for food and crop pricing to continue.
Positive Outlook
- Company had a strong quarter from an operational standpoint.
- Participation rents allowed the company to increase top-line revenues while keeping property-operating expenses relatively flat.
- Fortunate to have made it through Hurricane Ian with only minor damage covered by insurance.
- All of the permanent plantings owned have sufficient water.
- Over 99% of borrowings fixed for the next five-plus years, protecting against further interest rate increases.
Challenges Ahead
- Acquisition activity has been slower this year and is expected to remain slow for the rest of 2022 and likely into 2023.
- Acting conservatively with capital and being more selective with acquisitions due to increased interest rates and overall uncertainty within the economy.
- Monitoring the ongoing drought situation in the West.
- Working with tenants to take proactive measures to try to secure as much water availability as possible.
- Inflation continues to hover near the highest rates seen in over 40 years.