Farmland Partners Inc Aktie

Thank you for standing by. My name is Janice, and I will be your conference operator today. At this time, I would like to welcome everyone to the Farmland Partners, Inc. Q1 2026 Earnings Conference Call. [Operator Instructions] Thank you. And I would now like to turn the conference over to Luca Fabbri, President and Chief Executive. Please go ahead.

Thank you, Janice. Good morning, everybody, and welcome to Farmland Partners First Quarter 2026 Earnings Conference Call and Webcast. We truly appreciate you taking the time to join us for these calls because we see them as a very important opportunity to share with you, our thinking and our strategy in a format less formal and more interactive than public filings and press releases.

I will now turn the call over to our General Counsel, Christine Garrison, for some customary preliminary remarks. Christine?

Thank you, Luca, and thank you to everyone on the call. The press release announcing our first quarter earnings was distributed after market close yesterday. The supplemental package has been posted to the Investor Relations section of our website under the sub-header Events and Presentations. For those who listen to the recording of this presentation, we remind you that the remarks made herein are as of today, April 30, and will not be updated subsequent to this call.

During this call, we will make forward-looking statements, including statements related to the future performance of our portfolio, our identified and potential acquisitions and dispositions, impact of acquisitions, dispositions and financing activities, business development opportunities as well as comments on our outlook for our business rents and the broader agricultural markets.

We will also discuss certain non-GAAP financial measures, including net operating income, FFO, adjusted FFO, EBITDAre and Adjusted EBITDAre. 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 first quarter 2026 earnings, which is available on our website, farmlandpartners.com, and is furnished as an exhibit to our current report on Form 8-K dated April 29, 2026.

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 the documents we have filed with or furnished to the SEC.

I would now like to turn the call to our Executive Chairman, Paul Pittman. Paul?

Thank you, Christine. It's all in all, a pretty good quarter. I'm just going to address a couple of issues in my prepared comments, and then I'll turn it over to Luca. So the first issue is we've been getting some questions about what's the impact of the war in Iran on fertilizer, grain prices, farmer outlook, et cetera.

So let me kind of hit a couple of key issues. And if anybody has follow-ups, we can deal with it in Q&A. The first is on fertilizer. Most of the U.S. fertilizer does not come from the Middle East or from the Gulf generally. It frankly comes from the U.S. and Canada. So all in all, the U.S. farmer, while prices may be higher for fertilizer is sort of unaffected from a supply perspective on fertilizer.

So I think if this went on for another year, it would have some impact. But largely speaking, I haven't heard any reports about lack of fertilizer. What I have heard is some people changing crop decisions because cost of fertilizer is an issue, which may lead to slightly less corn being produced as opposed to soybeans in particular. So that's really kind of on the fertilizer front.

We have seen some grain price increases recently, particularly in wheat. The U.S. is not a huge worldwide producer of wheat compared to some other places in the world. But you have seen -- wheat is also very fertilizer intensive. You may see less wheat grown or less yield on wheat in other parts of the world because of the limitation on fertilizer production coming out of the Gulf.

So we've seen some wheat price increases, some corn increases, as wheat price increases as well. I think that's at least as much due to drought in the U.S. as it is to the war that's going on in Iran. The drought in the Southeastern portion of the U.S., which is a reasonably large wheat producer, is very, very significant. I read this morning, it's actually the worst drought that there's -- may have ever been at this point in the Southeast.

So that will lead to probably lead to somewhat increases in grain prices. And then the final question we've been getting is about how all that might impact our next cycle of rent negotiations. And the real answer is it's really too early to tell. This doesn't move through the -- things like the war in Iran does not move through the farm economy overnight. It certainly doesn't move through nearly as quickly as the up and down of the public markets.

So this is going to be a kind of slow-moving process. Higher grain prices obviously help us in our upcoming rent negotiations, which won't even start for another few months. And lower grain prices obviously hurt in those negotiations. But just to give context, hurt means we're -- largely flat and had a hard time getting increases, good times to there when we can get modest increases in rents.

The final issue I want to address before I turn it over to Luca is we did take some additional loan loss reserves, not because we're directly concerned that we won't collect but we are obviously making relatively high interest rate, high-risk loans, and we just think it's prudent to continue to make some reserves under the eventuality that we didn't collect everything.

Hopefully, those things get reversed, but we put them in our financials in an effort to be cautious and conservative given the risk profile of our loan program.

So that's -- with that, I'm going to turn it over to you, Luca, and I'll be back at the Q&A.

Thank you, Paul. This quarter was very much in line with expectations from an operational standpoint. The largest items of note, we actually already addressed in the prior call, which is the completed redemption of our Series A preferred units.

They were a significant overhang on the company in case we had to convert them into common at prices that we consider at a significant discount to our intrinsic value. But we have prepared for this event for a long time by shoring up our liquidity reserves, and we were able to satisfy our Series A holders in cash. Despite that, we still have a very strong liquidity position. We have access to about $114 million in untapped liquidity on our lines of credit.

So we from a balance sheet perspective, our company is very, very strong at this point in time. On the portfolio side, we continue to marginally improve the overall quality of our portfolio. We disposed of another California property, which we consider a region subject to volatility and to risks. And therefore, we welcome the reduction to that kind of exposure.

Overall, in the global picture, if you set AI aside, this is a time of great uncertainty and volatility and so on and so forth. And in the -- in the agricultural sector, in particular, there is quite a bit of trepidation about what's going to happen on the cost side, as Paul was outlining.

But overall, Farmland as an asset class is -- continues to demonstrate its strength and its resilience, and we remain a very, very strong believer in the quality of the asset class. With that, I will turn the call over to our CFO, Susan Landi, for her overview of the company's financial performance. Susan?

Thank you, Luca. I'm going to cover a few items today, including the summary of the 3 months ended March 31, 2026, a review of our capital structure and updated guidance for 2026. 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.

First, I will share a few financial metrics that appear on Page 2. For the 3 months ended March 31, 2026, net income was $0.6 million or $0.01 per share available to common stockholders, which was lower than the same period for 2025. AFFO was $2.1 million versus $2.3 million for the same period of 2025 or $0.05 per weighted average share, which was the same as Q1 of 2025. Page 5 shows a more comprehensive look at the main drivers of the changes year-over-year.

On the revenue side, we were positively impacted by higher interest income due to a higher average balance on loans under the FPI loan program and financing receivables. An increase in amortization of points and higher proceeds from oil and gas royalties. These increases were partially offset by lower rental income due to asset dispositions, the absence of auction brokerage and third-party management income due to the sale of MWA in the fourth quarter of 2025.

Operating expenses are slightly higher over the prior year due to the increase in the allowance for credit losses related to loans under the FPI loan program. This increase was partially offset by decreases in property operating and depreciation expenses, which are due to asset dispositions and savings on corporate and travel expenses as a result of the sale of MWA. On Page 12, there are a few capital structure items to point out.

We had undrawn capacity on the lines of credit of approximately $114 million at the end of Q1 of 2026. Borrowings during the quarter were primarily used to redeem the remaining Series A preferred units. We had rate resets on three MetLife loans during the quarter. The aggregate amount of these loans was $19.3 million.

The weighted average rate on these loans went from about 5.56% to 5.19%. The MetLife term loan #7 is scheduled to reprice in June. Moving on to Page 15, you'll see our updated outlook for 2026. The assumptions are listed at the bottom of the page. On the revenue side, changes from the February guidance include management fees and interest income, which is higher due to the amendment and extensions of loans under the FPI loan program.

On the expense side, changes from the February guidance include an increase in provision for credit loss allowance due to higher allowance on potential credit losses of loans. The forecasted range of AFFO is $13.2 million to $15.2 million or $0.30 to $0.35 per share, which is a decrease from the prior quarter on both the high and low end of the range.

This summarizes where we stand today. We will keep you updated as we progress through the year. This wraps up our comments this morning. Thank you all for participating.

Operator, you can now begin the Q&A session.

[Operator Instructions] Your first question is coming from the line of John Massocca with B. Riley Securities.

So maybe just to clarify on the loan reserve increase. Is that being tied to the performance of the borrower? I mean is there something specific you're seeing there? It just seems like it's an older loan, right? It's not a new loan necessarily creating more reserves. So just kind of curious why the change, it kind of seems like there wasn't a major change in the outlook for kind of farm valuations.

Yes. We make loans to a variety of different folks. One of the lenders -- one of the borrowers continues to have sort of some critical challenges in their overall business and have negative news cycle, if you will.

While we may feel secure about our specific loans, that negative news cycle always makes us nervous, which is really what's kind of driving the reserves. When things get messy for a borrower with other lenders, even though it may not directly affect our collateral position, it just makes the whole -- any situation more complicated. And in a non-sort of defined way, increases risk. And so that's what's driving those reserves.

Are those issues caused at all about a certain crop type having headwinds? Or is it more just very specific to the borrower themselves?

No, it's very specific to that borrower. It's not a crop type issue.

And in terms of the size of the outstanding loan program, I mean, is any of that kind of maintained size and kind of growing interest income tied to extensions on that -- with that particular borrower? Or is it just kind of more broadly either extensions or new loans...

Some of the extensions and some of the increased interest rates are related to that buyer or that borrower.

Shifting gears maybe a little bit. Has the conflict in the Middle East and maybe some of the uncertainty around prices impacted the disposition market for transactions to the extent you're still really looking for more kind of sale opportunities within your portfolio in your noncore portfolio?

No. What's going on in the Middle East doesn't have any kind of sort of direct line of sight impact on the transaction market for Farmland. What does have an impact is the general economy/general ag economy. And we are not in any real different situation than we were before hostilities in Iran started. We were in a somewhat challenging farm economy based on crop price versus cost of operation.

That makes farmers less aggressive bidders on properties. And as we always talk about, the farmers are the most aggressive bidders and really sort of set the price for properties. This -- again, this is not -- you don't have a pendulum here that swings very far. Good times are, okay, 5% if you're really lucky, 7% or 8% increases in land values on a per annual basis.

And bad times are only up 1% or 2% or maybe flat or maybe even down 1% or 2%. I think it's just incredibly important to always recognize that we're in an industry with a very slow, steady upward march in asset values due to scarcity and fundamentally due to food demand. Those are not things that all of us involved in the public markets have a hard time grasping this. You just don't get the kind of volatility swings we're used to seeing in asset values or crop price or anything else. It's very glacial in terms of -- with a pretty strong upward trend, but it just doesn't move quickly no matter what.

Okay. And then you talked a little bit about kind of the impact or non-impact of fertilizer prices. This is someone who's much closer to kind of the farm economy than most other people on the call. How impactful has the increase in diesel prices been? And is that something that can maybe be even more meaningful for farmers versus fertilizer or something where it's just a relatively small portion of the overall cost of running the farm?

So it's a relatively small portion is the answer. So a couple of things to grasp here. Number one, most farmers -- most farmers of scale do some level of hedging or prebuying of their diesel fuel. It's quite common for a farmer to have 10,000 gallons or multiple 10,000 gallon tanks of diesel on their farm. And they probably bought that sometime last winter, well before the Iranian hostilities began.

So not a huge, huge impact. But obviously, as they look forward on their budgets, they'll run out of that fuel sometime this summer, have to replace it. When they start trucking this fall, diesel will affect trucking costs. So it's certainly not positive for their P&L.

But again, it just doesn't come through very quickly because of the amount of kind of prebought capacity on diesel. Round numbers, diesel might be in the neighborhood of 10% of a farmer's crop budget, maybe a little less. So it's just not -- it's not a huge impact overall and probably less impactful than fertilizer cost on the corn and wheat crops. I hope that helps.

There's no other questions in queue at this time. There's one that just came in. It's coming from the line of Tousley Hyde with Raymond James.

Sorry to sneak this one in. Just a quick follow-up on the FPI loan program. So you have probably somewhere around $30 million coming in later this year. Are there any kind of priorities for capital allocation we should be thinking about share repurchases, deleveraging the balance sheet a little bit further, extending new loans? Any kind of color you can provide would be very helpful.

Yes. I would say that most of that capital when it gets returned to us is likely to go for continued deleveraging the balance sheet. If we -- I think our stock is still a relative bargain, although not as big a bargain as it has been in times past.

So you could see us buy stock back depending on stock price, but more likely deleveraging would be my current thinking. Luca or Susan, if you have a point of view on this, feel free to express it even if it's frankly different than mine.

No. As we've discussed, that's our priority right now on capital allocation is, frankly, deleveraging. But we remain, as Paul mentioned, we remain very, very opportunistic on the stock price and watching it and implementing potential stock repurchases.

Your next question is coming from the line of John Massocca with B. Riley Securities.

Yes. Just a quick follow-up one. Any kind of outlook currently for what you would expect the rate to be on the repricing of the term loan #7?

I'm going to turn that over to Luca or Susan, if you want to make a comment there.

At this point, we're expecting it to be fairly in line with what we did with the two that occurred in Q1.

Yes. The -- I would expect to add on that, the -- expect the spread to be consistent. But of course, your guess on rates is as good as mine.

Right. And is that locking in, in June? Or is it locking in, in advance of the actual change?

It locks just before.

Yes, it will be late May or early June.

There's no questions in queue at this time. That concludes our Q&A session. I will now turn the conference back over to Luca Fabbri for closing remarks. Please go ahead.

Thanks, Janice. We appreciate your interest in our company and look forward to updating you on our activities and results in the coming quarters. Have a great day, everybody.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Ladies and gentlemen, thank you for standing by. Hello, and welcome to Farmland Partners Inc. Fourth Quarter and Fiscal Year 2025 Earnings Conference Call.

[Operator Instructions]

I would now like to turn the conference over to our President and CEO, Luca Fabbri, please go ahead.

Thank you, Dustin. Good morning, everybody, and welcome to Farmland Partners Fourth Quarter and Full Year 2025 Earnings Conference Call and Webcast. We truly appreciate your taking the time to join us for this call because we see them as a very important opportunity to share with you our thinking and our strategy in a format less formal and more interactive than public filings and press releases.

I will now turn over the call to our General Counsel, Christine Garrison for some customary preliminary remarks. Christine.

Thank you, Luca, and thank you to everyone on the call. The press release announcing our fourth quarter earnings was distributed after market closed yesterday. The supplemental package has been posted to the Investor Relations section of our website under the sub header Events and Presentation. For those who listen to the recording of this presentation, we remind you that the remarks made herein are as of today, February 19, 2026, and will not be updated subsequent to this call.

During this call, we will make forward-looking statements including statements related to the future performance of our portfolio, our identified and potential acquisitions and dispositions, impact of acquisitions, dispositions and financing activities business development opportunities as well as comments on our outlook for our business, rents and the broader agricultural markets. We will also discuss certain non-GAAP financial measures, including net operating income, FFO, adjusted FFO, EBITDAre and adjusted EBITDAre. 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 full year 2025 earnings, which is available on our website, farmlandpartners.com. and is furnished as an exhibit to our current report on Form 8-K dated February 18, 2026.

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 in documents we have filed with or furnished to the SEC.

I would now like to turn the call to our Executive Chairman, Paul Pittman. Paul?

Thank you, Christine. So it was a very, very good quarter and a very good year for the company. Luca will go through many of these things in detail, but super strong AFFO, very strong asset sale program. We've continued to simplify the business with the sale of Murray Wise. We reduced our debt and our leverage overall, particularly when you consider that we have now paid off the preferred. So senior claims to common shareholders have been reduced substantially and now we have increased the dividend by 50%. This is something that's taken us a long time to get here, but it's driven by disciplined cost control and sort of disciplined strategic thinking with regard to what assets to own and what assets not to own. That process is driven at this point largely by Luca and the rest of the management team in Denver but as you all know, I'm still pretty involved as well.

So with that, I'll turn it over to Luca to be a little more specific about the events of the past year.

Thank you, Paul. I will actually pass the ball here to Susan Landi, our CFO, to walk you guys through more specific details about our performance, both in the quarter and the year. So I will stick also to some kind of broader general comments. We had a very, very strong Q4 in the context of a very strong year. I just want to remind everybody that this is kind of as expected, we historically have a very strong seasonality emphasis on Q4, especially on the revenue side because of the nature of some revenue streams that we recognize only when we actually have actual cash receipts.

We -- as Paul also mentioned, we had embarked an effort to really strengthen our balance sheet and our liquidity access, preparing for the repayment of our Series A equity that we just repaid here in February. So we were able to do so as a cash repayment rather than a common stock conversion, which would have been very dilutive. So we are very happy that we were able to strengthen our balance sheet and preserve the value embedded in our stock for our shareholders. We sold our brokerage and auction and asset management subsidiary, MWA, to people's company, but we continue to have a very close working relationship with the buyer and with our former team over there. So we essentially got a double benefit of simplifying our business and streamlining a little bit while not really losing access truly to the market intelligence that we derive from having that team within our organization.

[indiscernible] the 2026 outlook. It is also very strong. Our approach, especially at the beginning of the year, given the comment that I just made about seasonality. We try to be realistic, but and provide the best possible kind of picture to our investors as to what we expect for the year. But agriculture is a very uncertain business until you actually go and harvest the fruit and sell it in some cases. So we tend to remain somewhat cautious at the beginning of the year, given that seasonality is still far away from us. As far as dispositions are concerned, in 2026, we expect to continue doing little marginal improvements to our portfolio with some emphasis in California, for example. And we will do so whenever we have the opportunity to do it at what we consider fair prices there reflect the intrinsic value of the assets that we are disposing.

Given all of that, we felt very comfortable in raising our current dividend by 50% to $0.09 per share per quarter. And we look forward to proving to the market that, that was a very strong choice, a very, very good choice and in possibly, hopefully, outperforming the performance that we are expecting for the year.

And with that, I will turn the call to Susan Landi, our CFO. Susan?

Thank you, Luca. I'll be covering the financial results from 2025 and guidance for 2026. I'll be referring to the supplemental package, which is available on the Investor Relations section of our website under the sub-header Events and Presentations. Net income was $32.2 million for 2025 and $21.8 million for the quarter, or $0.65 and $0.49 per share available to common stockholders, respectively, which is lower than the same period for 2024. AFFO was $17.9 million for 2025 and $11.4 million for the quarter or $0.39 and $0.26 per weighted average share, respectively, which was higher than the same period for 2024. There are several key drivers of these variances. Total operating revenues declined by approximately $6 million, but this is primarily because of the dispositions that occurred in 2024 and 2025. These declines were partially offset by an increase in variable rents during the fourth quarter and increased interest income due to higher average balances on loans under the loan program.

Overall, total operating expenses, excluding impairments were down by approximately $3.6 million. This is primarily due to lower property operating costs and depreciation related to 2024 and 2025 dispositions and lower G&A expenses due to lower bonus expense in the current year and a onetime severance expense of $1.4 million and accelerated stock-based compensation that was recorded in the prior year. Impairment of assets increased by $17 million, which was related to certain West Coast properties that we have concluded had a loss in value. This impairment was recorded in Q2. Other income was lower than prior year due to lower gains on property dispositions, but this was partially offset by a $9.2 million reduction in interest expense as a result of significant reductions in debt that have occurred since October of 2024.

The increase in AFFO primarily relates to the increased activity under the FPI loan program, lower interest expense from the reduction of outstanding debt and overall lower operating expenses. There are a few capital structure items that I'd like to highlight. First, we had undrawn capacity on the lines of credit of approximately $164 million at the end of December 2025. As of today, we have undrawn capacity of approximately $111.7 million. The net borrowing subsequent to year-end were primarily utilized to redeem the remaining 68,000 outstanding Series A preferred units. This removed the common stock overhang and further simplified our balance sheet.

We also successfully amended our Farmer Mac facility in December, which led to an increase in our facility size from $75 million to $89.6 million. Format life loans have resets coming up in 2026 and on debt that totaled approximately $26 million. One of these loans repriced in January at 5.19%. Page 15 has our outlook for 2026. The assumptions are listed at the bottom of the page. The forecasted net income range is from $8.8 million to $10.9 million. The forecasted range of AFFO is $14.4 million to $16.4 million or $0.33 million to $0.37 per share. On the revenue side, fixed farm solar, wind and recreation rent reflects the full year impact of 2025 dispositions as well as lease renewals and variable payments, crop sales and crop insurance is expected to decrease from 2025, partially from our early season outlook on citrus and avocados and partially from 2025 dispositions.

On the expense side, a decrease in property operating expenses and depreciation, depletion and amortization is due to the dispositions that occurred in 2025. In addition, G&A decreased as a result of lower payroll costs, primarily due to the sale of MWA and due to lower expected credit losses on loans. Interest expense did increase as a result of borrowings that have occurred thus far in 2026. This summarizes where we stand today. We will keep you updated as we progress through the year. [indiscernible] our comments this morning. Thank you all for participating.

Operator, you can now begin the Q&A session.

[Operator Instructions]

And we will take our first question from Steven Dumanski from B. Riley.

Maybe looking at the guidance, you mentioned a little bit of the drivers because I'm thinking about the change versus in variable rent versus 2025. Kind of how much of that is asset sales roughly? And how much of that is just a different look on kind of farm revenue?

Luca, do you want to take that question, please?

I'm going to take a first past and I'll hand over to Susan. On the variable payments, there is -- it's a little bit of both, actually. There is both asset dispositions and the fact that some of our variable payments performed really, really strongly in Q4 2025 and we are taking a little bit more cautious approach in forecasting their performance in 2026 in Q4. And to be honest, this is really not based on any hard knowledge because both crop yields and crop pricing in Q4 is completely unknown to us. It's just a matter of kind of being a little bit more cautious in our forecast.

Susan, anything that you want to add to that?

No. Except that the majority of the decrease does relate to dispositions. We did have -- our farm rents were a little -- they were relatively flat. So we did primarily single year renewals as a result of that. But I'd say the vast majority of that decline would be related to 2025 dispositions.

Yes. And then maybe sticking with guidance a little bit. As I think about kind of the year-over-year decline that's expected in G&A, how much of that maybe is Murray Wise? How much of that is related to kind of expectations around your loan portfolio? And how much of that is just other kind of efficiencies -- and I guess maybe longer term, is the 2026 number you think close to what the run rate maybe is for you as an operating business.

So Murray Wise, there's a significant reduction in the G&A cost because we had quite a few employees, which we no longer have on the payroll. So it's a big chunk of it. But we are also making some other cost reductions in the company and our general overhead costs. There was a combination of all of those things. And frankly, I think that's sustainable and ongoing run rate is where we are for the 26th year.

Okay. And then on the disposition side, how should we kind of think about the runway for dispositions how much of that is maybe contingent on the California market becoming more open and having more transaction activity, are there other things kind of in your portfolio that you think are kind of salable today beyond some of your corn belt holdings?

So everything in the portfolio is salable, nothing that wouldn't sell. As far as California goes, the market there is now open again. The pricing isn't great, by the way, but the market is open again. you went through sort of the catharsis of buyers and sellers being super separated in terms of expectations on value, but that's now gaps now closed out. So these transactions occurring again. We will continue to weed out California. We have soured on California full stop. The very best properties we have in the almonds in particular almonds and other tree nuts likely to hold those at all in the transaction is incredibly good for us.

But for most of the rest of it, we will gradually liquidate it. But we're disciplined in terms of achieving the highest reasonable prices that we can get under current market conditions. As far as the rest of the country goes, the overwhelming majority outside of California is now based in Illinois. We will continue to sort of whittle down exposure in other states as much as anything for efficiency reasons at this point. If you only -- if you're down to just 1 or 2 farms in a state, you either got to grow again or you need to, frankly, liquidate those. And so we'll see some sales there. And then things in Illinois are for sale if somebody wants to pay top dollar. We are super, super bullish on Illinois. A lot of those assets are up 30% or more since we purchased them. But if we can achieve those gains and distribute to shareholders, we certainly, as we've proven in the past, are willing to do that.

Okay. And then just 1 kind of maybe technical follow-up. If you did sell a meaningful amount of California assets, I know it would kind of depend on to farm, but would that have more of an impact on your kind of fixed farm rents? Or would that flow through to kind of some of the variable rent opportunities?

It'd be strong -- it'd be a bigger impact on a variable.

Our next question comes from the line of Craig Kucera from Lucid Capital Markets.

I believe you had 2 FTI loans that were scheduled to mature at the end of January. Were those repaid? Or were there any extensions?

Yes, we did extend those to September.

Extended into December to end of the year. Okay, great. And it would seem like you've seen a decent pickup in that program over the last year. Are you still seeing a decent amount of demand?

Yes. The opportunity on the loan program is pretty strong these days. the loan program is kind of countercyclical in many ways to land prices and farmer economics. So we're in an environment where there are some struggling farmers. So therefore, we have some loan opportunities as long as we're comfortable with the collateral we frankly like to keep those loans out as long as we can because the returns are strong. That's the extension we made. We're not troubled by extending as long as collateral is still solid. And so I would say that, that program will be either growing a little bit or a steady state for the next year.

Okay. That's helpful. Changing gears, I think you mentioned in the supplement that you had a lease that transition from fixed to variable, it was fixed and variable, and it became just variable how meaningful was that to the fourth quarter variable payments? And was that lease now going to be sort of a standard 3-year type of lease? Or was that 1 of those years you discussed?

Luca, I don't know the specifics there, so you and somebody and the team can take that.

Yes. This was not a very significant movement. Off the top of my head, it was a 1-year extension on a farm in California that we have then disposed of, I believe. But in any case, it was not particularly significant to the P&L.

All right. Great. You've got the term loan on which I believe you're in the process of refinancing here this quarter. I think it matures in March. Can you give us a sense of kind of where you anticipate that might price?

Go ahead, guys. Okay. Susan, go ahead.

We think it's probably going to reprice at some point in the -- about the 5.3 range.

In other words, very much in line with the other -- with the market conditions that we see for this type of loans.

Okay. Great. It sounds like you guys might sell a few assets out of California opportunistically. I know there aren't any acquisitions or dispositions in the guidance, but as you look at the market, whether that's in the Midwest or Southeast, are you seeing market pricing where you could accretively acquire at your current cost of capital or seeing transactions that are attractive?

The answer to that question is pricing is not down any significant amount anywhere in the country. In the core of the Midwest, it might be down 2% or 3% at most from the peak. The other states may be a little bit more. California, of course, is different, but we're not going to be acquisitive there in any case. So I would say when you think about making good -- this is an asset class where 2/3 of your return is appreciation and 1/3 is current yield. So you need to buy high-quality farms and you need to buy value and you need to be financed in a way that you can be patient because that increase in value will definitely come.

It's sometimes a little lumpy -- but it's highly certain. So we can find acquisitions where we could expand. Current yield will not be as high as we would want -- if interest rates continue to lower, you may be in a place in which you're not running a negative spread between debt and farm yields, which makes expansion easier. That being said, our attitude is we don't need to grow for growth's sake. Our attitude is to create value for shareholders, whether that's through dispositions or through growth. It's about raising money -- growing money, if you will, not growing crops or the size of the business.

[Operator Instructions]

Our next question comes from the line of Tousley Hyde from Raymond James.

With the increase in the dividend, how should we think about the capital recycling strategy and uses of disposition proceeds going forward, particularly as it relates to share repurchases.

So I think share repurchases as our stock price continues to appreciate, will probably decline. I still think we are trading way below our breakup value or liquidation value of the portfolio assets. But that gap has certainly narrowed here in the first quarter. So I think stock buybacks will be less common than they've been in the past, assuming that stock price holds. As far as increasing the dividend, we're increasing a dividend driven largely by increased AFFO. Obviously, it puts us in a position where we might have to make less special dividends to stay in tax compliance.

But the dividend increase is largely driven by the cash flow expectation, not by asset sales. The dividends -- asset sales drive special dividends, but we don't really want to drive our regular common dividend based on asset sales because they're frankly unpredictable.

Got you. Okay. That's helpful. And then I did have 1 quick follow-up related to the SBI loan program. I just want to make sure I'm understanding the accounting and kind of the contract terms correctly here with some of these renewals if the original terms called for principal and interest to a maturity, is that entire balloon payment kind of being repackaged and extended out? Or is the interest being collected and just the principal being extended?

Usually, we are getting interest along the way and principle is what's being extended, not just -- we don't have -- we tend not to capitalize interest. I wouldn't say never, but that's not the ordinary course for us in most of our lines.

There are no more further questions. I will now hand the call back over to our President and CEO, Mr. Fabbri, for closing remarks.

Thank you, Dustin, and thank you, everybody, for joining us today. We appreciate your interest in our company and look forward to updating you on our activities and results in the coming quarters. .

Thank you all for joining. You may now disconnect.

Good day, everyone, and thank you for joining this Farmland Partners Inc. Q3 2025 Earnings Call. My name is Jim, and I'll be your operator for today's session. [Operator Instructions] Also a reminder, today's session is being recorded. It is now my pleasure to turn the floor over to our host, President and CEO, Mr. Luca Fabbri. Please go ahead, sir.

Thank you, Jim. Good morning, and welcome to Farmland Partners third quarter 2025 earnings conference call and webcast. We truly appreciate you taking the time to join us for this call because we see them as a very important opportunity to share with you our thinking, our strategy in a format less formal and more interactive than public filings and press releases.

I will now turn over the call to our General Counsel, Christine Garrison, for some customary preliminary remarks. Christine?

Thank you, Luca, and thank you to everyone on the call. The press release announcing our third quarter earnings was distributed after market closed yesterday. The supplemental package has been posted to the Investor Relations section of our website under the sub-header Events and Presentations. For those who listen to the recording of this presentation, we remind you that the remarks made herein are as of today, October 30, 2025, and will not be updated subsequent to this call. During this call, we will make forward-looking statements, including statements related to the future performance of our portfolio, our identified and potential acquisitions and dispositions, impact of acquisitions, dispositions and financing activities, business development opportunities as well as comments on our outlook for our business fronts and the broader agricultural markets. We will also discuss certain non-GAAP financial measures, including net operating income, FFO, adjusted FFO, EBITDAre and adjusted EBITDAre.

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 third quarter 2025 earnings, which is available on our website, farmlandpartners.com, and is furnished as an exhibit to our current report on Form 8-K dated October 29, 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 in documents we have filed with or furnished to the SEC.

I would now like to turn the call to our Executive Chairman, Paul Pittman. Paul?

Thank you, Christine. Good morning, everyone. This is, again, a very strong quarter for us from the standpoint of AFFO performance. I'll let the rest of the team make some more specific comments about that. I want to make a couple of comments, though. As you all read overnight, appears to be some sort of a China trade deal involving agriculture commodities. I think that, that's obviously going to be beneficial for American farmers. It's a little unclear. It looks like maybe a 1-year deal and quite a bit of soybean sales. I tried to find this morning in the news more detail. There doesn't seem to be much. My sense is if you look back to the last time the Chinese were really aggressive in terms of soybean buying, which was, I think, the ’21 year -- the 2021 year. This will be a material bump in the exports of soybeans from the U.S. to China over the next few months. I don't think it's sort of earth-shattering in terms of positive for farmers. It's certainly good news. But since it's only a 1-year deal, it's hard to see whether it will have a real impact on long-term rents or land values. Land values continue to go up despite the fact it's been a somewhat tough farm economy for operating farmers this year.

The other comment I would like to make about this year's AFFO, while we are thrilled with how strong it is, it is based on some very positive operating events that occurred during the year on some of these farms and also the expansion of our loan program with some sort of opportunistic lending. The caution I want to give everyone is while we're thrilled with this year, it's based on some onetime events. So frankly, I think next year, we'll start out next year with kind of the same place we started this year, which is a sort of more modest AFFO than what we're actually ending up with. We'll do our best to find the onetime events next year that bump that number, but you can't promise them since they are onetime events.

With that, I'm going to turn it over to you, Luca, to go through things in more detail.

Thank you, Paul. I will, of course, echo Paul's both kind of celebration of a very strong financial performance for the quarter and for the year as well as a little bit of a caution note regarding performance next year as we always strive to do our best to build on top of a very strong bedrock of operating performance, good things every year, but you never know whether we can pull that off.

A couple of things that I wanted to highlight for this quarter is number one, the sale of our brokerage and third-party farm management subsidiary, Murray Wise Associates. I think this is a very good outcome for our shareholders in terms of getting a good price for this subsidiary, for this business as well as simplifying significantly our operations. And this is very much in line with our strategy of simplification that we've been pursuing now for several years. This is also a very strong outcome for another set of very important stakeholders in the company, which is the employees. I think that this sale gives the team at MWA a very strong platform to continue their professional growth, while maintaining our access to their collective knowledge and experience and our relationship with them because we plan to continue using their services in the future.

The second is a transaction I want to highlight is that we exchanged $31 million worth of our Series A preferred units for a set of properties in Illinois that were actually originally part of the transaction that kind of led to the issuance of the Series A preferred. And I want to highlight that the properties were sold at a much appreciated value compared to the value of 10 years ago, appreciated by about 56%. This, again, is a very tangible proof of the appreciation potential in this asset class that we continue to prove to the market that -- and to deliver -- our efforts to deliver that value to our shareholders. In that vein, we are also announcing that we are planning to issue a special dividend for this year, very much in line with what we did 2 years ago and last year. This year, we are targeting a range of between $0.18 and $0.22 per share to be issued in January 2026 alongside with the regular dividend. Again, this is very much in line with our commitment to deliver value to our shareholders.

And with that, I will turn over the call to our CFO, Susan Landi, for her overview of the company's financial performance. Susan?

Thank you, Luca. I'm going to cover a few items today, which includes a summary of the 3 and 9 months ended September 30, 2025, a review of our capital structure, a 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.

First, I will share a few financial metrics that appear on Page 2. For the 3 months ended September 30, 2025, net income was $0.5 million or $0 per share available to common shareholders, which was lower than the same period for 2024, largely due to the recognition of deferred gains from 2023 property dispositions of $2 million versus the current period dispositions resulting in a loss of $0.5 million. Note that the decrease in disposal gains is partially offset by interest savings associated with our lower average debt balance.

AFFO was $2.9 million or $0.07 per weighted average share, which was higher than the same period for 2024. AFFO was positively impacted by significantly lower interest expense as a result of debt reductions, lower property operating costs and increased interest income due to a higher average balance on loans under the FPI loan program. For the 9 months ended September 30, 2025, net income was $10.4 million or $0.18 per share available to common shareholders, which was higher than the same period for 2024, largely due to net gains on dispositions of 35 properties that occurred in the current year, significant debt reductions resulting in interest savings, as well as increased interest income due to the higher balance under -- on loans under the FPI loan program. AFFO was $6.5 million or $0.14 per weighted average share, which was higher than the same period for 2024. AFFO was positively impacted by lower property taxes, lower general and administrative expenses and lower interest expense as a result of significant debt reductions.

Next, we'll review some of the operating expenses and other items shown on Page 5. Gain on disposition of assets was higher during the 9 months ended September 30, 2025, than the same period in 2024 due to the dispositions of 35 properties in 2025 with aggregate consideration of $85.5 million, which resulted in a net gain on sale of $24.5 million compared to a gain of $1.9 million in 2024. The net loss on disposition of assets during the 3 months ended September 30, 2025, was due to the sale of a West Coast property. As a result of significant reductions in debt that have occurred since October of 2024, interest expense decreased $3.2 million for the 3 months ended September 30, 2025, and $8.4 million for the 9 months ended September 30, 2025. In addition, the dispositions resulted in lower property operating expenses and depreciation expense.

General and administrative expenses decreased $0.4 million for the 3 months ended September 30, 2025, primarily due to the accelerated stock compensation that was recognized during the prior year period. General and administrative expenses decreased $1.7 million for the 9 months ended September 30, 2025, compared to the same period in the prior year due to a onetime severance expense of $1.4 million plus the accelerated stock-based compensation that was recorded in the prior year.

Next, moving on to Page 12. There are a few capital structure items to point out. Having repaid our lines of credit in full with repayments totaling $23 million in July, we had full undrawn capacity on the lines of credit of approximately $159 million at the end of Q3 2025. We have no debt subject to interest rate resets in 2025 and as a result of our swap, no exposure to variable interest rates. Page 14 breaks down different revenue categories with comments at the bottom to describe the differences between periods. A few points that I'd like to highlight include fixed farm rent decreased as expected because of the dispositions in Q4 of 2024 and thus far in 2025. Solar, wind and recreation increased primarily due to proceeds from a solar revenue sharing arrangement with the tenant in the first quarter of 2025, but that was also partially offset by dispositions. Management fees and interest income increased primarily due to the increase in loan issuances under the FPI loan program. And finally, direct ops, which is a combination of crop sales, crop insurance and cost of goods sold. Crop sales did increase as a result of higher prices and yield on citrus and avocados as well as sales occurring earlier in 2025 than in 2024, while the cost of goods sold increased due to higher maintenance costs. This increase in cost of goods sold was partially offset by lower impairment on inventory.

Page 15 has our updated outlook for 2025. You can find the assumptions listed at the bottom of the page. On the revenue side, changes from the July guidance include an increase in management fees and interest income as a result of the higher loan balance under the FPI loan program. Increases 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. The decrease in other items is primarily due to less auction and brokerage revenues as a result of the upcoming sale of Murray Wise & Associates.

On the expense side, changes from the July guidance include an increase in impairment related to the current period, impairment expense for certain properties on the West Coast as a result of updated market information, and this was primarily offset by a decrease in property operating and depreciation expenses related to property dispositions. The forecasted range of AFFO is $14.5 million to $16.6 million or $0.32 to $0.36 per share, which is an increase from the prior quarter on both the high and low end of the range. This summarizes where we stand today. We will keep you updated as we progress through the year.

This wraps up our comments this morning. Thank you all for participating. Operator, you can now begin the Q&A session.

[Operator Instructions] We'll hear first from Rob Stevenson at Janney Montgomery Scott.

When does the '23 farm sale and the retirement of the preferred units close? Is that sometime sooner rather than later in the fourth quarter? Does that extend into early first quarter? How should we be thinking about timing there?

Luca, why don't you handle that question, and I'll comment as necessary. Christine, I think you have the date.

That transaction will close December 10.

Yes. The important additional fact there is that we -- in that negotiation, we were able to agree with the party that we're making the exchange with that we will not have to pay the dividends on that preferred from, I believe it was from August 1, maybe September 1, but we got a little...

August 1.

August 1. So we have a little benefit there in terms of not having to pay the dividend as well.

That's great. And then any additional sales that you guys are expecting to complete in the fourth quarter? Are you basically done with sales for this year with this 23 Farm disposition?

We -- the 23 Farm disposition luckily did not count as our 1 of 7 under the tax law because we're limited to 7 transactions a year under most cases. So it didn't count because of the way it's done as an exchange. So we -- I think we've done maybe 5 or 6 transactions so far. We've got a few other small ones in the hopper. Hopefully, something else happens between now and the end of the year, but not likely to be on the scale of that 23 Farm deal. It will be single-digit million kind of transactions if something else happens.

And would that -- at this point, given that it's small, is that still within -- would be within the special dividend, the range that you guys gave in the...

Yes, we're likely to stick with that range at this point without regard to what happens with one additional acquisition. I mean there is discussion on that.

And then what are you guys planning on doing with the MetLife Term Loan that matures in March?

Luca, do you want to handle that?

Yes. We are planning to renew it probably with MetLife themselves or with one of our other lenders.

And where does pricing today look for you guys relative to the 555 that is currently costing you?

We're still -- kind of interest rates are kind of moving a little bit and that renewal is not in the cards for another couple of months at least. We are expecting spreads to stay fundamentally consistent.

Okay. That's helpful. And then you guys raised the guidance, but I think in the commentary, talked about the guidance decrease for the other items from the sale of Murray Wise. Is that running at somewhere close to $1 million a quarter? How should we be thinking about how we should be looking at that on a quarterly run rate going forward as we adjust our models removing Murray Wise from the expense and revenue lines?

Luca, please handle that, and it may be more detailed than you can do on this call, and we could follow up later. But...

Yes, I'm looking at Susan. She is pulling up some numbers.

Yes. So Murray, so the revenues are somewhat lumpy. So there's not really a good answer for that. I mean it's the nature of auction and brokerage, right? It's not going to be a consistent thing. Usually, that's going to be more of a Q4, Q1 type of activity. So looking at -- so I don't know that it's going to have a significant impact on our bottom line overall with that removal. We haven't -- as far as like more specifics, I'm not sure that I...

Yes. And so let me add to that. In terms of the remainder of this year, it's going to be a little noisy, but truly de minimis given that this transaction is expected to close in November 15. As far as next year is concerned, the -- we were always very cautious in projecting the performance of that business. So with typically revenues only slightly ahead of costs. So overall, the impact of that transaction is going to be, relatively speaking, negligible in the context of the overall P&L in 2026.

Okay. And then last one for me. In the detailed assumptions on the outlook, you guys increased legal and accounting due to increased litigation spend. Is that more stuff off the short and distort stuff? Or is that something else that you guys are litigating at this point? How should we be thinking about that?

Yes, we have -- we continue to have some legal costs related to the short and distort but they're frankly modest, certainly compared to where they used to be. And I think we're hopefully getting closer to winning, so to speak, in that regard. Then, we've also got an ongoing legal dispute in Louisiana on one of the farms that has -- it's local counsel, so it's not extremely high numbers, but it's a number we hadn't budgeted for that we're spending defending that situation. Just a small uptick, but a negative surprise, so it wasn't really budgeted for.

[Operator Instructions] We'll hear next from the line of Craig Kucera at Lucid Capital Markets.

I wanted to follow up and get a little more color on the Series A transaction. I know they can convert the remaining preferreds into common OP units in the first quarter. In their discussions with them, have they indicated they're looking to convert? I mean, I'm just trying to figure out from a share count and preferred dividends perspective from a model perspective next year.

They -- it's not that they have the right to convert. It's that we have the right to pay them off or convert them. We will -- I won't say 100%, but I'll say 99% probability that we just pay that off and it does not get converted because I believe the stock price that would get converted at, is below intrinsic value. So that's on the upcoming conversion, Craig. As far as the transaction itself, this is a gentleman that we -- very successful in agriculture, but also other industries, a guy from Illinois that we bought these farms from, it’s been 10 years ago now, basically. And we've maintained a very good relationship with him. He was for a time, a decent sized common shareholder and then certainly has owned his preferred, and he's been a good long-term partner. He, for his own sort of family wealth planning, what he wanted to buy back were the farms closest to his traditional family home because 10 years later, I think he decided he could frankly afford to re-own them and pass them on to his children. And so he did that. And that's where the $31 million of farms came from. And as Luca said earlier, a great transaction for us. We got a 5% to 6% a year kind of appreciation during the hold period. And fundamentally, a lot of that transaction was financed with a 3% coupon preferred, which we're now trading him back for those farms. So a huge win for shareholder value in the transaction.

Just as a follow-up, Craig, of course, we've known that this was coming for a long, long time in terms of the expiration, if you will, of the Series A preferred. So we are very well prepared with our liquidity access to our lines of credit to pay down the -- to extinguish the Series A preferred in cash. Of course, that will have an impact on the P&L, at least for a while because we are trading at 3% preferred with the borrowing on lines of credit and now call it at a blended in the mid-5s, but we're prepared to manage that as well.

Okay. I appreciate that color. That's helpful. Changing gears. There was a mention there, obviously, crop sales were significantly better than we were looking for. And then the footnote it references the sale of a walnut property, which accelerated some recognition of revenue and expenses. Can you give us some color on how much that impacted crop sales revenue and the cost of goods this quarter?

Susan, do you want to handle that one?

Yes. Bear with me for a minute while I pull the figures.

While she's pulling the figures, I'll make a general comment. Basically, when you sell off a farm like that, that has inventory on the tree, you do a transaction related to that inventory. And so it gets done more quickly than it would have been if it had actually waited around to pick the walnuts. I mean that's the big picture on the ground reason it was accelerated. Susan, you can make the financial comments as appropriate.

So we recognized about $0.2 million on the sale of the Blue Heron, our property in California, the walnut property.

Okay. So not that material?

It's accelerated – it’s for the accelerated portion.

Yes. Okay. That's helpful. And just one more for me. Looking at the guidance, one of the main increases in revenue was related to management fees and interest income. It doesn't look like you funded any loans on a net basis here in the third quarter. Does that imply you were seeing a pickup in the loan pipeline expected to close in the fourth quarter or maybe something that you thought was going to pay off, didn't pay off? Just some color there would be helpful.

Yes. It's really the second thing that you said. Somebody came to us and said we'd like to continue to extend this loan subject to us having a strong security position and being comfortable with the loan. We're almost always willing to do that because we are a high-cost lender. And as long as we're comfortable with the security position, we're happy to keep making the money. So we extended somebody out, and that led to the move of the projections.

[Operator Instructions] We'll move forward to John Massocca at B. Riley Securities.

Maybe kind of continuing with the line of questions about the loan portfolio. Are you expecting or are there significant kind of maturities upcoming in kind of the loan receivables in 2026?

Well, we -- as we have -- we've mentioned this in the prior conference calls, so I'll mention it again. We are gradually shrinking the portfolio because it's -- we're arbitraging private market value to -- against public market discount and through stock buybacks or special dividends, distributing that cash back to our shareholders or that profit back to our shareholders. So in that process, obviously, we're shrinking the revenue line of the company. And so we've focused on expanding this loan program a little bit because it's high current yield, right? You don't get the appreciation, but you get quite a bit of high current yield from doing that. And so we've done that intentionally, and we'll kind of continue to do it because as we shrink portfolio size, we still have to frankly cover the overheads. And that loan program helps us do that. So that's -- so we're pretty intentional about actually expanding that loan program gradually as time moves on. We don't want to take on too much risk, of course, but with loans with good assets underneath them, happy to do it.

Okay. And maybe switching gears a little bit, like bigger picture, what's the exposure in the portfolio either by acreage or rent or however you want to measure it to soybean farms and farmers?

Well, that -- so when you look in the corn belt, which is now with the exception of California the overwhelming majority of what we own, meaning Illinois, mostly, a little bit in Missouri. Those farms are, generally speaking, on an every other year rotation between corn and soybeans. So the quick answer would be approximately 50%. Now corn is -- for the farmer, corn is a consistently more profitable crop. And so it's really not 50-50. It's probably more like 60% corn in any given year, 40% soybeans because corn -- most of those row crops, corn, soybean farmers will occasionally do corn on corn to increase the percentage of corn acres they have. It just -- it's an overall revenue and profitability, a slightly more profitable crop in 9 out of 10 years. So if they can get away with it, they'll do corn 2 years in a row in some fields. So it shifts that -- it shifts it from the 50-50 to something slightly more weighted to corn.

John, I know you're very familiar with the concept I'm about to explain. So I'm saying this more for the benefit of other listeners. The -- I think the 100% of our row crop leases with farmers that would farm soybeans are fixed cash rents. So our exposure to soybean and especially trade wars and so on and so forth is very much indirect. It's not through crop shares and so on and so forth. It is through the overall financial health and strength of the farmers, which is, in any case, backed by crop insurance.

Okay. But as we think about kind of maybe the exposure to any distress in that space or any kind of recovery in that space, it really touches on pretty much everything from a commodity crop basis in your row crop portfolio just because they are potentially rotating that planting in a given year...

Yes, it's actually -- so what Luca said is an incredibly important point. We have no direct exposure to speak of to soybean prices. But we have significant indirect exposure to farmer profitability and soybean prices are a piece of that. So -- but it's not really a story about soybeans. It's a story about farmer profitability. And so, if the Chinese reenter the market and the Chinese are the world's largest consumer of soybeans, that will be good for U.S. farmers. Now it's not as good as you might think, however, and I've said this earlier in other conference calls. If the Chinese are buying all their soybeans from Brazil, somebody else used to be buying from Brazil that shifted to buying from the U.S. So the negative impacts of what China does vis-a-vis the U.S. share of our exports, it mutes it because other buyers come back into the market to replace the soybeans that got pushed out. And then the flip side is also true. If they start buying here, it will modestly elevate pricing. but it's going to shift to -- they're just not -- there's a kind of a defined universe of soybeans in the world, and you're really kind of moving the shelves around on the board, not fundamentally making massive changes in overall demand. On the margin, don't get me wrong. When the Chinese stop buying from the U.S., that is marginally bad. And when they start buying from the U.S., it is marginally good because there's such a power in the marketplace. But it's not massive dramatic shift.

The other thing is, and that's why I said it's about profitability, not about soybeans per se. If soybeans become more profitable to farm, the corn market through the Chicago Board of Trade basically has to buy corn acres by increasing the profitability of corn farming. It's Econ 101. And so because it's -- those 2 crops are competing for the land base in the Midwest. And so soybean prices go up, it will move corn prices up. Corn prices go up and move soybean prices up. So again, this is all a good thing. But the story for us and our company is always this global food demand just keeps gradually increasing and global demand for the commodity, for the products made from corn and soybeans in particular, just keeps increasing, whether it's ethanol or food. And there is a scarce and gradually declining land base of the really high-quality soils, and we own a lot of it. And that's why you see back to the transaction we did with the preferred, that's why you see this kind of 5% to 6% per annum appreciation of those farms. And it kind of goes on no matter what because it's not connected to soybean prices. It's connected to long-term farmer profitability. And you cannot turn the world's bread basket to negative margin for very long. Don't believe everything you read in the press. There's not much farmer bankruptcy, by the way, as an example. There just isn't.

Appreciate all the detail on that. Just one last one. Apologies if maybe I missed it earlier in the call. On the buyback, I understand it's not in the updated guidance, but any more runway for buyback in 4Q and maybe even heading into 2026 just off the back of kind of capital raise and dispositions done earlier in the year?

Luke, I'll let you handle that.

Yes. So we -- our decisions on buybacks is something that we do on an ongoing basis, if you will. We still see the current stock price and the discount to NAV as being a very, very strong proposition for buybacks. It's our own stock as we unfortunately joke is the cheapest farmland we can buy. But with the expiration of the Series A preferred and rolling that into the lines of credit, we are increasing our interest expense. So that also comes into the equation. Fundamentally, our buyback activity going forward will be driven as usual by potential additional dispositions and therefore, proceeds from those dispositions. And if we -- we're knocking on wood. I mean we are working to increase our stock price, of course, but if we were to see the stock price dip, we would definitely jump in and probably and use our further access to lines of credit to harvest the opportunity.

Yes. Let me just add one thing to that. I mean if you think about this as really distribution of cash to shareholders, I mean, that's what a buyback fundamentally is. And obviously, we try to manage it against low stock price versus higher stock price. With the idea that an upcoming special dividend coming, we're going to trade probably at a slightly elevated basis for the next few months. So, it sort of lessens the probability of buybacks and the flip -- and in addition to that, during this time of year, our methodology of getting money that's out to shareholders based on the profit that we've made from sales, the way to do that is a special dividend. When you get out in the rest of the year, the way to do that is the buyback. And so, at this particular time and for all the reasons Luca said, plus that sort of general view that we’re not likely to be doing a lot of buybacks right on top of the special dividend. I don't think there'll be a lot of that in the next quarter. But as Luca said, if you saw the stock price decline substantially, we'd probably step into the market.

Our next question today will come from the line of Tousley Hyde at Raymond James.

Thanks for taking my question. I just got a quick one here. In the past, you mentioned that the long-term average rate increase is somewhere around 3% to 4%. I was just kind of curious, as you pare down the portfolio, how that average might skew going forward, if at all?

It will stay consistent. These averages are largely -- the nationwide averages are largely dominated, frankly, by row crop Midwest. because that's the biggest piece of the farmland economy overall. California specialty crop and total economic impact to the nation is probably somewhat similar, but much lumpier because it's different crops and every crop has its own cycle. So the -- as our portfolio gets more and more weighted to the Midwest, it probably sticks closer to those kinds of averages rather than further apart.

And do you have any updates you can share on the renewable progress for this year?

Yes. This is a year in which these renewals are largely done by now because you're prepping the soils in many cases for next year's crop already. So the renewals are kind of pretty much behind us or being finished as we speak. It looks to us like in the row crop region of the country where we have rollovers, it will be more or less flat with last year, which is the last few years, we've been getting great big rent increases. We won't get those this year. What we do, though, when we're in a cycle where you're negotiating those rents in a somewhat tough economic cycle for the farmers, we just -- we cut the negotiations of the new rent -- new lease to a 1-year extension. That way, what we're not doing is signing up in a difficult economic negotiating cycle for another 3-year lease. We just extended out 1 year. And then this China news, for example, probably is going to make the negotiation cycle that starts late next summer easier than it was this year, easier, meaning higher rents are possible.

That was our final question in the queue today. Mr. Fabbri, I'm happy to turn it back to you, sir, for any additional or closing remarks.

Thank you, Jim. We appreciate your interest in our company and look forward to updating you on our activities and results in the coming quarters. Have a great rest of your day.

This does conclude today's Farmland Partners Inc. conference call. We thank you all for your participation, and you may now disconnect your lines.

Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, 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. [Operator Instructions].

I would now like to turn the call over to Luca Fabbri, President and CEO. Please go ahead.

Thank you, Kelvin. Thank you, everybody, and good morning. Thanks for joining us today for this second quarter 2025 Earnings Conference Call and Webcast. I will start as usual with some customary preliminary remarks from our General Counsel, Christine Garrison. Christine?

Thank you, Luca, and thank you to everyone on the call. The press release announcing our second quarter earnings was distributed after market closed yesterday. The supplemental package has been posted to the Investor Relations section of our website under the sub header Events and Presentations. For those who listen to the recording of this presentation, we remind you that the remarks made herein are as of today, July 24, 2025, and will not be updated subsequent to this call.

During this call, we will make forward-looking statements, including statements related to the future performance of our portfolio, our identified and potential acquisitions and dispositions, impact of acquisitions, dispositions and financing activities, business development opportunities as well as comments on our outlook for our business rent and the broader agricultural markets.

We will also discuss certain non-GAAP financial measures, including net operating income, FFO, adjusted FFO, EBITDAre and adjusted EBITDAre. 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 2025 earnings, which is available on our website, farmlandpartners.com, and is furnished as an exhibit to our current report on Form 8-K dated July 23, 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 in documents we have filed with or furnished to the SEC. I would now like to turn the call to our Executive Chairman, Paul Pittman. Paul?

Thank you, Christine. My comments will be relatively short this morning. I'll be, of course, available in the Q&A. This is a very good quarter for us. Land values have continued to stay strong in the Midwest as is demonstrated by the gains on the asset sales we made in that geography. We also have now liquidated nearly all of the portfolio that we owned in Colorado. We still have a very modest exposure there, one cattle feedlot that we still own as well as just a handful of row crop farms.

We -- as 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. California is still struggling. You've seen, and I'm sure in the press release that we took a write-down on a handful of farms out there. Luca will address this a little more in his comments. Our position when we think about write-downs is really that we are long-term investors. So as long as we think a farm's value will recover, we're not concerned about some given farm in our neighborhood sold high or sold low, it doesn't really affect our direct thinking about the value of our farms. We think about most of our farms and what is the value in a 2- to 5-year or longer time frame.

This group of farms, though, that we took the write-downs on, we had reached a point where we believed that due to the crop types and the fact that they are specialty crops, and the water issues in the region that we needed to take a write-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 a recovery -- value is just not true. In traditional row crop, long-term appreciation will always help you out. 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 wait and you're going to have to bulldose those trees out and replant them. And so those factors led us to take this write-down. As I said, Luca will talk a little more about it, we can touch that in the Q&A. The other thing I want to address just briefly because it's been -- it was in the press as recently as the last couple of days, is this idea that Coca-Cola is going to replace a high fructose corn syrup with regular cane sugar syrups as the sweetener in Coca-Cola.

And what does that mean to the marketplace? What does it mean to corn markets, so on and so forth. So a couple of kind of important facts. First, this is, from an overall corn market perspective, an incredibly small percentage of the market. So high fructose corn syrup is around -- accounts for around 3% of total corn produced in the country. There's a University of Illinois research piece that was put out yesterday by a professor called Scott Irwin. That's where I get that number from, if you want to go look it up.

So about 3% of the market. And then Coca-Cola, of course, is a fraction of that fraction. So the specific Coca-Cola issue is de minimis in the extreme. The entire high fructose corn syrup market is pretty small as well as a percentage of the overall corn production. Now just to the science of it for a second. Certainly, my view is that there's never been any really credible research that the type of sweetener has significant, meaningful, measurable impacts on health outcomes.

The percentage of glucose, fructose and sucrose are modestly different in the different types of sweeteners. But the -- but there's really no difference, 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. No matter what the form.

So hopefully, this doesn't turn into a significant thing, even if, I think the science will dominate at least for most food products what -- high fructose corn syrup is, is an incredibly low-cost source of sweetening, much cheaper than cane sugar in most cases. And so hopefully, like I said, the science kind of wins here. Even if it doesn't, I think the point is it's just not that big a piece of the corn market. With that, I'll turn it over to you, Luca, to make your comments.

Thank you, Paul. And just to add a couple of kind of finer points to this last topic that Paul was addressing. Coca-Cola is proposing to not replace its regular product based on HFCS, but to add a new product that uses cane sugar. And by the way, in most grocery stores, you already can find that product. It's typically referred to as Mexican Coke or Mexican Fanta because it comes from the company's manufacturing facilities in Mexico that use cane sugar.

The other important thing that you have to think about is that still, this is a product that comes from agriculture, comes from -- is produced on farmland. And that's still in the overall picture of Farmland as an asset class, this is reconfirming that even in shifting consumer preferences from one product to another, whether it's HFCS Coke versus cane sugar Coke or organic versus traditional 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.

Kind of going back to the performance of the company in the last quarter, specifically, as Paul mentioned, we have completed some additional asset dispositions. Year-to-date, so far, we've sold about $80 million in assets, realizing gains of approximately $25 million. And as Paul was saying, mostly these sales were in the High Plains, which is a region that we intended to exit long term anyway. And about this time, we also sold some mostly Class B soil farms in Illinois, so not the top of the kind of quality scale that in our portfolio in the corn belt. One thing that I wanted to highlight is that the buyers in the two major transactions that we've done so far this year were family offices.

These are super ultra-high net worth individuals and families that have access to all sorts of assets and investment vehicles and so on and so forth. And they are choosing to put their money in Farmland. And this really strengthens the value of Farmland as both a very reliable long-term store of value as well as a long-term appreciation play. And this goes back to our kind of the reason why we started our company years ago, which is to make this asset class accessible not only to high net worth individuals, but also to everyday kind of investors, like the vast majority of our investor base.

We used a portion of the proceeds from these asset sales in stock repurchases. So far this year, we bought back about 2.3 million shares, which is about 5% of our fully diluted shares outstanding prior to the buybacks at an average price of about $11.24, which we consider very attractive, and that was a total of about $26 million that we used in these stock repurchases. The last point I wanted to discuss, as Paul mentioned, this quarter, we took a relatively unusual step of recording some impairments on some of our farms.

Specifically, these were four farms in California. And the vast majority of those $16.8 million impairments were on two very specific farms. One is a pistachio farm that has a kind of very delicate water situation, delicate not from a physics and physical availability of water standpoint necessarily, mostly from a regulatory standpoint, meaning that because of California regulations on water access, this farm will be progressively more and more challenged in accessing the -- in being able to use water to the extent necessary to support production farm-wide.

And which is why we decided to take this impairment because we don't see this water situation resolving at all, given that, it's regulatory driven. The other one is a much smaller farm, our only walnut farm in our portfolio. And there, in addition to the regulatory water issue that led to the impairment of the first farm, we also had a longer-term view that walnuts as a crop are in a delicate position, especially in the U.S., given the significant production worldwide that emerged in China and therefore, has made that crop relatively less attractive as an investment in the U.S.

So we don't see that situation resolving itself. Those were all the comments I wanted 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?

Thank you, Luca. I'm going to cover a few items today, including a summary of the three and six 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 sub header Events and Presentations.

First, I'll share a few financial metrics that appear on Page 2. For the three months ended June 30, 2025, net income was $7.8 million or $0.15 a share available to common shareholders, which is higher than the same period for 2024, primarily due to gains on dispositions of 32 properties during the current quarter in addition to lower G&A costs and interest expenses and higher interest income.

AFFO was $1.3 million or $0.03 per weighted average share, which is higher than the same period of 2024. AFFO was positively impacted by significantly lower interest expense as a result of our debt reductions and higher interest income due to increased activity under the FPI Loan Program. For the six months ended June 30, 2025, net income was $9.9 million or $0.18 a share available to common stockholders, which is higher than the prior year, largely due to the impact of 34 dispositions that occurred in the current year-to-date period.

In addition to significant debt reductions resulting in interest savings, lower G&A expenses as well as interest -- increased interest income due to a higher balance on loans under the FPI Loan Program. AFFO was $3.6 million or $0.08 per weighted average share, which is higher than the same period for 2024. AFFO was positively impacted by lower interest expense, higher interest income and proceeds from a solar lease arrangement with a tenant.

Next, we'll cover some operating expenses and other items that you can find on Page 5. Gain on disposition of assets is higher due to the dispositions of the 34 properties in 2025 that had an aggregate consideration of $81.6 million, resulting in a net gain on sale of $25 million 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. As a result of significant reductions in debt that occurred since October of 2024, interest expense decreased $2.8 million during the quarter versus the same quarter in the prior year and $5.2 million year-to-date versus the prior year.

In addition, the dispositions resulted in lower property operating expenses and depreciation expenses. General and administrative expenses decreased for the three and six months ended June 30, 2025, primarily due to a onetime severance expense of $1.4 million during the 6-month period in June of 2024, which is partially offset by slight increases in other expenses in the current period. Moving on to Page 12. There's a few capital structure items that I'd like to point out. We had undrawn capacity on the lines of credit of approximately $160 million as of June 30, 2025.

We had no debt subject to interest rate resets in 2025 and as a result of our swap, no exposure to variable interest rates with the exception of whatever we draw on our line of credit. In addition, we have repaid our lines of credit in full with payments totaling $23 million in early July. Page 14 will break down the different revenue categories then along with some comments at the bottom to describe the differences between those periods. A few points to highlight are, as expected, 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 proceeds from the solar revenue sharing arrangement with the tenant that we received in the first quarter of 2025 and partially offset by dispositions. Management fees and interest income increased primarily due to the increased loan activity under the FPI Loan Program. Page 15 has our outlook -- our updated outlook for 2025.

You can find the assumptions listed at the bottom of the page. On the revenue side, changes from the May guidance include 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 FPI 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.

On the expense side, changes from the May guidance include an increase in impairment related to the current period impairment expense for certain properties in the West Coast, 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 balance outstanding on the debt as a result of principal repayments during the current quarter and subsequently in July and a decrease in weighted average shares related to the impact of the share repurchases that we've made since May.

The forecasted range of AFFO is $12.8 million to $15.5 million or $0.28 to $0.34 per share. This 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.

Ladies and gentleman we will now began the question and answer session. [Operator Instructions]. Your first question comes from the line of Robert Stevenson with Janney.

Luca, how much more can you guys sell in 2025 given the multiyear disposition program that you guys have been operating under?

So, so far this year, we've -- we actually have done three sale transactions that count under the rules. So we are -- we have four more transactions. So we are really relying this year on the safe harbor, based on seven transactions rather than the dollar amount because of the prior history on sales. And therefore, the total dollar amount will, of course, very much depend on the potential size of each of those remaining four transactions, assuming that we do all the four..

Okay. And if you do all four of those, is that trending towards needing to pay a special dividend again at the end of the year -- this year?

Very hard to say because it also depends on -- given the dynamics between GAAP accounting and tax accounting. For example, if we end up selling some of the farms where we recorded impairments, those impairments will turn into tax -- we will have a tax impact. And so 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, especially versus repaying debt and buying back stock? How are you guys thinking about capital deployment in the back half of this year?

Luca, I'll take this one. So as far as capital deployment goes, Rob, we are very disciplined in terms of acquisition strategy right now. a farm that joins something we already own comes up, or especially good bargain for some reason comes up, we'd certainly look at it. But we're pretty slow in terms of our pursuit of acquisition opportunity for the reasons you stated.

Buying back stock is a more -- in most cases, more effective. We're still long-term believers as you can see with what we've done in the last year or two, we are much, much more concentrated on the U.S. Midwest, Illinois, in particular, part of the marketplace. That gives us a much, much safer and more stable portfolio than we have had in the past.

The only downside is it's relatively low current yield because cap rates in that margin -- in that region because of the safety are pretty low. But the long-term appreciation in that region is better than anywhere else. And so long-winded answer, but we're just not very acquisitive and not likely to be.

Okay. Susan, the legal and accounting guidance went up about $300,000 at both the low and high end. Anything major driving that increase?

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

All right. And then the last one for me. The preferred units are eligible for conversion in a little over six months. Any thoughts at this point on how you guys might address those?

Yes. There will be almost no chance that we convert those into shares. Given that our stock is so deeply undervalued, we will pay that off either with cash from asset sales or from borrowings under our lines of credit. There is no -- I shouldn't probably say 100%. So there's a 99% probability that, that is not going to be converted.

Your next question comes from the line of Craig Kucera of Lucid Capital Markets.

I want to circle back to the pickup in variable payment expectations. Was that entirely due to sort of an improved outlook on the citrus and avocados? Or did you restructure any leases to have a larger variable payment component like one of your competitors has been doing?

Susan or Luca, you need to take that, I don't know the specific facts.

Yes. No, we haven't -- we haven't had the need to restructure any lease arrangements. So it's just essentially based on crop dynamics. And as we refined our views throughout the year, we have a better view on crop yields and crop prices. Susan, I don't know if there's anything else you want to add?

No, I don't have anything else.

Okay. That's helpful. Changing gears, we're hearing more and more about some tighter lending to farmers and your loan portfolio has nearly tripled since the third quarter of last year. Are you seeing rising demand? And is there a ceiling on what that portfolio might be as a percentage of assets?

Yes, I'll take that. So yes, we do see more and more inquiries about farm lending. There's -- we're in a somewhat difficult, I won't say very difficult, but somewhat difficult operating environment for farmers, for row crop farmers in particular. So we would expand that lending program, if there were good loans to make modestly. That being said, we don't want that to become too big a percentage of our portfolio at any point in time, just because it's -- our core business is owning farmland, not loans. We like that business. We like the loan business because of the returns. It certainly helps us generate cash flow for dividends and operating overheads, but we're not likely to expand it significantly. No.

Okay. Got it. I want to circle back to the impairment charges you took in California, kind of the back of the envelope, looks like it was about 6% of your sort of total cost basis there. But you mentioned most of it was at two farms. Can you give us a sense of what the write-down was on a percentage basis at those farms? Is it somewhere in the order of 30% at several?

On one farms where we took the majority of that impairment was actually a little over 50%. We were very aggressive. We want to just take -- bite the bullet once, to be honest. I don't know if you have handy the details, that's the one I remember off the top of my head.

Yes. They're both in the neighborhood of about 50%, the two large ones.

When you -- let me just add to that. When you see the regulatory environment fundamentally take away about half of your water on a California farm, it is incredibly detrimental to the value. And that's what's going on out there. And so that's -- we took pretty significant write-downs on those farms for that reason.

Got it. And just one more for me. I mean, just given you took the charges, I know you look longer term, 2 to 5 years or even longer. Are you actively looking to sell some farms in California? And is there a bid?

Yes, there's -- we are actively looking. We've got a couple of the farms we took the impairments on actually listed, and we're trying to see if we can get them sold because we just -- when we decide a farm isn't going to -- you don't want to day trade, if you will, farmland. That's not how to do it.

You don't even want a yearly trade farmland. What you want to do is basically hold for long-term appreciation potential. But once you decide that something is in trouble and going to stay in trouble for a meaningful period of time, half a decade or more, and you're losing money on it owning it 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 get rid of it. And yes, there are bids out there. You just have to be disciplined on not asking too much. I think some investors are unwilling to do what we did and just take the write-down and then reprice the asset and see if you can move it.

Your next question comes from the line of John Massocca of B. Riley Securities.

If I look at the full year outlook, like not that there were huge moves, but variable payments kind of increased versus your last providing guidance in crop sales came down a little bit. And I'm guessing I'm imagining that's just crop type mix. And maybe can you provide any color on kind of how the various pushes and pulls are there in terms of crop type, what's doing well, what's doing poorly and maybe kind of why?

Yes. Let me just address that in a very general sense. And if somebody wants to add specifics from the rest of the team, they can. What happens here is about once each quarter, we reevaluate the budget for both the farms we're operating, which is crop sales, generally speaking, a handful of farms that we direct operate.

And again, for everybody's benefit, direct operate doesn't mean we have employees. It means we have a contract with some farmer, but we're taking the economic risk on the crop. And then variable payments is, of course, crop share leases or bonus leases in California. So what happens on that once-a-quarter review is the crop, you start with a good base budget-- base budget based on what happened last year and what happened in average in the last five years, et cetera, et cetera.

And then you refine it as you get into the crop season and you actually can see the fruit on the trees. And so all that's happening here is we're seeing certain types of farms do a little better than we expected. In the second quarter, in particular, you see the citrus harvest get essentially completed. It goes on in the first and second quarter.

You now can look at the tree nuts, which are of late summer or early fall harvested crop. You can start seeing whether you've got a really high volume of nuts on the tree or not, so on and so forth. And we make some adjustments and budgeting updates based on that, and that's what's driving those numbers.

That makes sense. Maybe on California specifically, how much kind of--how long was kind of the outlook into some of these water issues in some of the farms that you took the write-down in? And I guess, are there any other farms in the portfolio today that are at risk 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 much kind of -- how far over the horizon can you see when some of these water regulatory issues are going to occur?

Well, so on the water regulatory issue, most of this is based on what's called SGMA, which was a groundwater management law that was put into place four or five years ago now. And then as -- and the implementation of SGMA is largely based on water districts or counties, 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've got maybe a worse water situation than you used to have based on the regulations, but at least you now have predictability and certainty. So that process is largely well underway in most water districts and counties in California. So what we were seeing here and like take -- in particular, the pistachio farm, what came out of that regulatory process and that water district process as it came to the final rules related to the SGMA law was pretty negative.

And that's why we took that big write-down on the pistachio farm. So if we believe there was a need to write something else down, we would have already done it. So hard to answer with certainty, but we don't see anything we're going to write down right away where we would have done it now. I can't tell you because it's this whole SGMA thing is probably 75% done, not 100% done at this point, 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.

Okay. And when you say like -- I know you're using rough numbers, but the SGMA thing is about 75% done. Is that like 75% of water districts kind of already have their plans in place? Or is that something are we...

Yes, that's what I meant by that. And...

And then last one is on the balance sheet. How should we kind of think about utilization of the $50 million of cash you kind of have on hand today, just given prior comments on the Series A versus maybe the attractiveness of buying back stock versus debt. I mean I'm just kind of thinking like, is there a potential that you carry a relatively large cash balance through the remainder of the year, just given the preferred unit -- potential need to repay the preferred units next year?

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

Yes. As always, my answer to that question is that we -- this is a juggling of different balls, meaning of different variables on an ongoing basis. Whenever we have liquidity available, we always look at the stock price to evaluate how attractive is to go in the market and do stock repurchases to create value for the remaining shareholders, what are interest rates, what are our specific repayment opportunities on specific pieces of debt.

So for example, of the $50-odd million that we have on the balance sheet as of the end of the quarter, we already used some to pay down lines of credit. So now we don't have any expensive -- pretty expensive debt outstanding at this point in time. So it's -- I know it's not 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 run in our discussions on an ongoing basis.

Let me just add one 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. So just sitting on a bunch of cash kind of waiting to pay off that preferred next year is actually making us a little bit of money right now. So that's worth keeping in mind.

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

Thank you, Kelvin. We appreciate your interest in our company. Thank you again for joining us today, and we look forward to updating you on our [indiscernible] results in the coming quarters. Have a great rest of your day.

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