Gladstone Land Reit Corp Aktie

Greetings, and welcome to Gladstone Land Corporation, First Quarter Earnings Call. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the call over to Mr. David Gladstone, Chairman and Chief Executive Officer. Thank you. You may begin.

Well, thank you so much for that nice introduction. This is David Gladstone, and welcome to the quarterly conference call for Gladstone Land. Thank you all for calling in today. We appreciate you taking time out of your day to listen to our presentation. First, we're going to hear from Catherine Gerkis -- she's Director of Investor Relations. She's going to provide a brief disclosure regarding certain regulatory matters concerning this call today. Catherine, go ahead.

Thank you, David, and good morning. Today's call may include forward-looking statements, which are based on management's estimates, assumptions and projections. There are no guarantees of future performance, and actual results may differ materially from those expressed or implied in these statements due to various uncertainties, including the risk factors set forth in our SEC filings, which you can find on the Investors page of our website, gladstoneland.com. We assume no obligation to update any of these statements unless required by law.

Please visit our website for a copy of our Form 10-Q and earnings press release, both issued yesterday for more detailed information. You can also sign up for our e-mail notification service and find information on how to contact our Investor Relations department. We are also on X, @GladstoneComps as well as Facebook and LinkedIn. Keyword for both is the Gladstone Companies.

Today, we'll discuss FFO, which is funds from operations, a non-GAAP accounting term defined as net income, excluding gains or losses from the sale of real estate and any impairment losses on property plus depreciation and amortization of real estate assets. We may also discuss core FFO, which we generally define as FFO adjusted for certain nonrecurring revenues and expenses and adjusted FFO, which further adjusts core FFO for certain noncash items, such as converting GAAP rents to normalized cash rents. We believe these metrics can be a better indication of our operating results and allow better comparability of our period-over-period performance.

Now I'll turn it back to David Gladstone.

Well, thank you, Catherine. And just to remind you all, we still own about 99,000 acres across 144 farms. About 56,000 acres of -- acre-feet of water, which is more than 18 billion gallons. Our farms are in 14 different states and our water assets, well, they're all in California. That's where it's the driest. We didn't have any acquisition or sales activity during the quarter, but we may consider selling some additional farms during the next few quarters. If we're able to complete some of those, we'd like to use most of the proceeds to pay down debt and buy back preferred stock. We've been doing a lot of that. We continue to take a disciplined approach as we always do to these acquisitions and active -- there's some activity in the market now, but not much, still kind of slow. When conditions improve, it may make sense to start growing again. So we're watching all the numbers and trying to determine where we're going to go from here.

Let me talk about a couple of leases. Prior to the call, due to market conditions affecting certain of our permanent crops, particularly the nuts and the wine grapes, we modified the lease structures -- lease structures so that we can handle a couple of different things. Fixed costs were allowed to participate more in the upside because we're in the higher crop share participation. We've modified our leases so that we're taking a lot more risk in terms of growing, and we continue to operate 2 properties with the help of third-party growers. Overall, 2025 harvest came in very strong. We were all wrong, including the U.S. government. Imagine that they projected things wrong. Particularly on the almond side and pistachio side, the yields were generally meeting or exceeding our own projections. And the 2025 crop just continues paying. We keep getting money in.

We signed up most of these same farms under the similar agreement that we had in '26. So we expect to see some similar earning patterns this year. I think it would be very hard to meet or exceed those things that we did last year. That was quite a year of 2025. And I also want to remind everyone that the crop insurance continues to play a very important role to all of us. It helps us limit the downside risk on the farms that is if something happens, which sometimes does, we can call on the insurance to give us some money back.

Our goal is to eventually transition all of our farms back to more traditional lease structures with fixed-based rents. But the timing of that will depend on several factors that are out there today. Most importantly, we've got to get some lower interest rates. I don't know what's going on over at the Federal Reserve, but they just aren't playing the game they need to play. Looking ahead, we have 5 leases scheduled to expire over the next 6 months. In total, these leases represent about 4% of our total lease revenue for the year-to-date in 2026. We're currently in discussion with both of the existing tenants that are in these -- that 2 of these properties are in and the prospects of new tenants about leasing any of these farms. I think we'll have them all back in shape.

And now I'll give a quick update to some of the ongoing tenancy matters that we're working through. Currently have 8 farms that are wholly or partially vacant, and we're actively working towards solutions to get these farms back into a stable. We think we're getting close to a few of these, and I think we'll be in good shape before the year ends. We're also currently recognizing revenue in a cash basis for leases with 4 tenants. We were able to resolve one of those situations during the quarter, but we're adding 2 new tenants to the list after they fell behind on their rent payments. I'm going to stop here, and we'll call in the guy who's really in touch with the world of farming. That's Bill Reiman. He's been reporting much of our current management focus. And Bill, do you want to come on board?

Yes. Thanks, David. Good morning, everybody. As we've been reporting, much of our current management focus is on these properties being operated under the modified lease agreements or farmed directly utilizing third-party farm operators. with the marketing season for almonds and pistachios for the 2025 crop about half done, we're seeing prices firming up, especially with pistachios. Couple that with our crop yields being larger than forecasted, our final crop revenue and profit numbers for 2025 should beat our expectations. Looking forward to the 2026 season, we are through winter, which ended with a very meager snowpack in most Western U.S. watersheds, although many areas where our farms are located received above normal rainfall, especially in the early spring. This means spring soil water content is high, and it should get crops off to a potentially strong start.

As of April 1, our almond bloom was complete. And while across California, bloom was mixed, our locations are pretty darn good with initial crop sets stronger than last year's. March had an unusual hot spell right in the middle of pistachio bloom, and this weather event caused quite a few issues around the state. Specifically, some trees have aborted a significant percentage of their crop. It's difficult to tell the impact to our orchards at this time, mainly because the 2026 crop year is considered what we call a down year for pistachios. Pistachios are what we call alternate bearing, meaning that crop yields on a year-to-year basis can vary from very high to very low and can be very dramatic. Since this is a low production year or a down year, as we say, some of our pistachio blocks didn't have as much crop -- didn't have much crop on there before the heat spell. So it's possible that impact we feel will be minimal.

Another reason it's hard to predict is just how the remaining fruit set develops. There's a long way to go in the growing season, and we just don't know how it will shape up. So -- and also another factor this impact is with a major reduction in supply, it's definitely going to continue putting upward pressure on pricing. There's a chance that pricing outweighs the crop loss. So we'll just have to wait and see.

Currently, all of our properties where we have invested capital in the crops are tracking according to budget. And we may have an increase in water expense on a couple of ranches, we should end up right in line with budget targets. Talk about markets a little bit. We think most ag real estate markets in the Western U.S. have bottomed out, and we're starting to see a little more activity with transactions. In particular, we've seen several pistachio acquisitions completed in the last 6 months at prices we haven't seen in a few years. We don't believe valuations are necessarily making a comeback just yet, but there are some strategic buyers willing to pay a higher price for orchards with good cash flow potential.

Coastal California values remain flat with higher-than-normal inventory and the Pacific Northwest is stable. When really good properties come on the market up there, they sell very quickly. Medium, lower-quality properties sit and wait. I'd say values and rents in the Pacific Northwest are stable. And then last note on real estate markets, particularly in California, but really all over the West, we're seeing a divergence of values between properties with really good water and those without. Due to regulations and policy, we expect that to really be a permanent situation.

The war in Iran, continued tariff drama, trade tensions are all still in the headlines. The crop markets seem to have settled in and kind of accepted this uncertainty to a large degree. Net crop markets continue to show notable resilience and strength, particularly for pistachios, see tremendous growth in demand for all things pistachio in global markets. Growth prices are continuing to move upward. We expect our minimum pricing for 2026 to be significantly higher than 2025. So that's good news. I would say the general sentiment in the pistachio industry is even with a large number of nonbearing acres, it's underplanted. So this is really good news for growers and the value of their crop going forward. And for us, it's really important. It's the largest crop in our portfolio.

Almonds have been pretty steady, some minor ups and downs due in large part to the drama in the Strait of Hormuz, but prices have lately been trending upward after recent crop size projections were released, showing a similar crop to last year. It appears the market was expecting a larger crop and therefore, lower prices. We've reported in the past that we believe the market is underbought. So these lower-than-expected predictions are driving buyers to fulfill their needs.

Wine grape markets continue to underperform, although we're beginning to see some varietals, particularly some white grape varietals, become short in supply. At the moment, this isn't causing any increase in prices or providing any incentive for wineries to contract for supply, but it is the first encouraging sign we've seen in a couple of years. Vineyard removals continue at a rapid pace in California and around the world. So we're hopeful that this pullback in supply will soon bring the market back into balance. There's been a lot said about fertilizer fuel prices jumping up due to the war. While this is true, our exposure is somewhat limited. Overall fertilizer cost as a percentage of total cultural cost for most of the crops growing on our farms is relatively small. In the case of our operated farms, there were many purchases made pre-war. So that limits the impact in those particular cases.

Finally, water. We initially had a strong start to the winter in terms of snow and rain. However, once we got past early January, we only had a few storms come through, and they came in late winter and early spring. The result was a very weak snowpack, but reservoirs above normal and good spring moisture set the season off on a good note. We're in the market looking for good opportunities to acquire water for this year and beyond. We're still experiencing the positive effects of this recent wet year trend that's resulted in availability of water at economical prices. Our team continues to evaluate these opportunities with the goal of strengthening the overall water security of the portfolio through both long and short-term strategic water purchases, continuing to invest in water delivery, storage infrastructure and identifying opportunities to create synergies across our farm assets. Now I'll turn it over to our CFO, Lewis Parrish.

Thanks, Bill, and good morning, everyone. I'll start with a brief update on our recent financing activity. We did not incur any new borrowings or repay any loans during the quarter, but we did add some unencumbered properties to certain existing and new credit facilities that increased our immediately available liquidity by about $50 million.

In January, we redeemed all of our Series D Term Preferred Stock to avoid a step-up in the coupon from 5% to 8% -- that redemption was funded through a combination of common stock issued under our ATM program and a draw on our line of credit, which has since been repaid. So far in 2026, we've raised about $50 million through our ATM program. And along with the majority -- along with the proceeds from the recent property sales, the majority of this capital has been used to reduce leverage on the balance sheet, including the redemption of the Series D Term Preferred Stock, repaying the line of credit and buying back Preferred Stock through our repurchase program. And speaking of that last point, we've bought back over $6 million of Preferred Stock so far in 2026 at an average repurchase yield of 7.4%, resulting in a total gain of nearly $700,000.

Turning to our operating results. For the first quarter, we recorded a net loss of about $4.3 million and net loss to common shareholders of $10 million or $0.24 per share. Adjusted FFO for the first quarter was $3.1 million or $0.08 per share compared to $2 million or $0.06 per share in the same quarter last year. The increase in AFFO was primarily driven by an early pistachio crop bonus payment we received, partially offset by ongoing tenant-related issues we continue to work through.

Year-over-year fixed base cash rents decreased by about $2.4 million for the quarter, primarily due to lost revenues from 1 property that was transitioned to direct operations last year and 2 tenants that were placed on nonaccrual status this quarter. The prior year quarter also included a $2.4 million termination fee from an outgoing tenant. This decrease was largely offset by an increase in participation rents of about $4.4 million, primarily due to receipt of an early partial bonus payment on the 2025 pistachio crop.

Typically, this bonus is paid in either late 2026 or early 2027, but one of our processors paid a portion of it early, which allowed us to recognize that revenue earlier than normal. The remaining portion of the bonus is still expected to be recognized on the normal schedule and recognized in the fourth quarter. Net income generated from crop sales on our direct operated farms was about $1.9 million during the first quarter, and that was also primarily due to the early pistachio bonus payment. And also similar to participation rents, we expect to recognize the remaining portion of this marketing bonus later in 2026.

On the expense side, our recurring cash operating expenses increased by about $750,000. Total related party fees declined slightly, primarily due to a lower base management fee resulting from recent farm sales. Property operating expenses increased, mainly driven by the cost of supplemental water we were required to provide on one of our properties pursuant to the lease as well as higher professional fees associated with protecting water rights on certain farms in California. G&A expenses increased primarily due to higher legal and accounting fees incurred during the current quarter. And finally, cash flows from operations increased largely as a result of higher cash receipts from participation rents and crop sales, partially offset by the receipt of that termination fee in the prior year quarter.

Turning to liquidity. We currently have about $150 million of immediately available capital and over $110 million of unpledged properties that could be used as additional collateral as needed. Currently, over 99% of our borrowings are at fixed rates with a weighted average interest rate of 3.41% locked in for another 2.5 years. This has helped shield us from the interest rate volatility we have seen over the past few years. Looking ahead, we have about $17 million of scheduled principal amortization payments due over the next 12 months, which is less than 4% of our total debt outstanding. We also have about $155 million of loans with fixed rate terms that reset over the next year, though the loans themselves are not maturing. This includes about $133 million of loans under our MetLife facility that are scheduled to reprice in January 2027.

Finally, regarding our common distributions. In April, we declared a monthly dividend of $0.0467 per share for the second quarter of 2026. At our current stock price of $9.44, this represents a 5.9% annualized yield, which is above the REIT sector average. I'll turn it back over to you.

Okay. Thank you, Lewis. Overall, demand for prime farmland growing berries and vegetables is very stable right now in our regions, particularly along the coast where we are. We're also starting to see some signs of improving in certain permanent crops, both in the pricing and the broader economies for those crops. So we're hopeful that this is the worst that all the things that happened to us in the last couple of years are behind us. But it's too early to say that. You don't know what's going to go with the crop, and that makes it difficult. We're just like many other REITs that is different. It belongs to the fact that -- our manufacturing facilities are outside, and they're also alive and growing. So it's a different world that we're in, obviously, and it's very hard to predict.

In closing, over the long run, we expect inflation, particularly for the food sector to continue to move higher. There doesn't seem to be any slowdown there. We expect the values of the underlying farmland to increase as well. And over time, as a result, we should be in good shape in terms of collateral for all of our loans. We expect this especially to be true of healthy foods such as the ones we grow. These are fresh fruits and vegetables and nuts and long-term trends toward healthier eating continue to push these products. Now we'll open it up for some questions. So Victoria, if you'll come on and guide us through that.

[Operator Instructions] Our first question comes from Craig Kucera with Lucid Capital.

I think last quarter, you had thought you were going to get the marketing bonus in early April. Clearly, a lot of it was recognized here in the first quarter. Is there any left that you will expect to recognize in the second quarter? Or will we expect all of it kind of in the back half of the year?

So as far as cash -- well, speaking for the bonus specifically, we do expect to record -- to be able to recognize the remaining part in Q4. As for the amount, I'll just give you -- we don't know yet, of course. But if we had to guess, and I'm going to let Bill Reiman chime in on this, too. But last year, the marketing bonus was -- when I say last year, I mean for the '24 crop, it was $0.90 a pound. And we don't know the full bonus yet, but the early bonus payment equated to about $0.50 a pound. So right now, I think we expect the total bonus to be higher than last year, but we don't know that for sure. But I think if we had to guess at a range, it'd be somewhere between that $0.40 per pound coming in Q4 or it could be much higher than that. I'll let Bill chime in with any more insight to that bonus amount or what we're seeing prices doing.

Yes, Lewis, you nailed it. We're -- it's supposed to be higher than last year, and nobody is really revealing their cards yet. But yes, $0.90 a pound last year. We've got $0.50 so far. It could just be $0.40. It could be a full $0.90. We just -- nobody is really hinting at anything at this point, except that it's going to be larger than last year.

Got it. So roughly 50% plus or minus sounds probably pretty reasonable with maybe some upside.

Yes.

Okay. Great. In the 10-Q, you referenced that less than 5% of California was in sort of a drought designation, and you had some commentary on that. But I'm curious to hear your thoughts on how your Florida farms are performing thus far in 2026.

So I think this is the first time since I've been here where California was not in a drought and Florida was. So definitely a reversal of importance there. We've had some -- we haven't heard of any news on our farms being short on water to the extent where it's impacting the operations on the farms. And it is in a drought, and there are regulations coming through for certain farmers having to be called on to cover losses of wells going dry. But we haven't heard of any issues with our farmers having -- being short on water and covering their crops. Bill, if you have anything more to add on that?

Yes. No, that's true. There hasn't been any restrictions, any -- there hasn't been any crop losses due to lack of irrigation water. We did have in the wintertime for frost control, we had some issues, but that's using water for frost control, uses a large amount of water, but -- and we had a few issues with neighbors there. But other than that, there haven't been any crop impacts whatsoever.

Okay. That's helpful.

And there's one footnote here that you should know about. We have a water farm in Florida. and it's got plenty of water. So we're not seeing any severe drought situations down there. I think we're going to be fine in Florida forever because you pretty much put a stick in the ground and it's water down there. So it's a situation which the wind blows one day and it's cold and then all of a sudden, everything is bright and shiny as it is most days. Keep going, Craig, any more questions?

I do. I've got a handful more. David, you mentioned you're going to sell -- might sell a few farms in the next couple of quarters. Last year, I think you sold about $90 million, maybe $70 million the year before. Can you kind of bracket the dollar amount you think you might wind up selling? Or can you do that at this point?

That's a difficult one. I don't know if you know it in farming, selling a farm is a big to do, and you never know when they're going to follow through. We have one now in which we have a letter saying they're going to buy it, and we'll see the lawyers are drafting. And I'm glad to get rid of that one because it gave us some problems in the past. But I don't really have a number. I'm hopeful that we can sell a couple of farms, but I don't think we need to sell more than that. We're pretty well covered in tenants that are working farms and the ones where we don't have a strong tenant and we've taken them over, these are the ones in California.

We've got some good growers. I've been surprised. I didn't think it would work out as well. But last year, it was just a boomer in terms of return on investment. So I guess we will do maybe what we're doing somewhere between 2 and 5 farms.

It's a good range, yes.

Okay. That's helpful.

He's gonna sell 2 to 5 farms. What you got, Craig?

Change gears. I'm curious about your leasing activity year-to-date. It looks like you moved one farm from fixed to participation rents. Can you give us some color on where that farm is located and what the crop type is?

That's a potato farm in Colorado. The base rent was basically cut in half and -- but we are expecting the variable rent component of that farm to get us pretty much right to where we were with the prior lease. But that's another variable that won't be known until the second half of the year.

Okay. And just one more for me. I mean you've been pretty aggressive on issuing equity to take down the preferred. You got through the first round. You've got a couple of others at 6%. Are you anticipate continuing to do that throughout the year?

The repurchase program on the Series B and C, we would like to continue being active in that repurchase program.

[Operator Instructions] Our next question comes from John Massocca with B. Riley.

This is Max stepping in for John. What is the outlook for re-leasing at truly vacant properties, either in terms of dispositions or re-leasing?

So I think... Sorry. We have a few farms that we're working on right now are not producing income. They're vacant, as you mentioned, that we think we're pretty close to getting deals in place. Now it's not necessarily the traditional types of ag leases. We're working on alternative streams, for example, fallowing incentive programs, water leases, solar leases. We've got -- we're discussing terms with potential tenants on these. And hopefully, within the next 3 months or so, we can get some of these executed. But the ones -- the ones I'm specifically talking about, these are some of the larger farms in that vacant category. So hopefully, for the next 3 to 6 months at most, we can get at least half of this acreage back to income producing.

Great. And could you remind us why the cost of sales is so low relative to crop sales? Was that because you already booked costs associated with that revenue? Or was it something else?

Yes, exactly. This is related to the '25 crop. All those expenses were recognized in Q4 of last year as the crops were sold. But with pistachios, at that time in Q4, we only had -- we were only able to recognize the minimum payment associated with that crop. This is the bonus payment that we were not able to measure at the end of last year. So that's just straight revenue straight to the bottom line for us as will be the remaining part of that crop, the bonus payment.

Got it. And apologies if this was already discussed, but is there a time line for getting the participation-based farms back to fixed base rents?

We wish we knew that answer as well. It's definitely not for the '26 crop year and '27 crop year is still in flux, but if I had to guess, I think we'd be in a similar situation for the '27 crop year as well. Bill, what's your outlook on this?

Yes. I mean it's really the tenant pool, it's really difficult. Capital is constrained -- working capital is constrained for a lot of growers. And so until that loosens up, I just don't see the number of growers willing to take on the risk on leasing. I just don't see that pool increasing in the near future. So hopefully, that turns around sooner rather than later. But as of right now, we're probably stuck in this for at least another season.

Got it. And are there -- is there any new distress in the portfolio? Has the rebound in tree nut prices potentially mitigated credit risk somewhat?

A little bit, a little bit. But for a lot of growers, that downturn in almond pricing, they're still paying the price for that, right? It takes time. Prices have rebounded, obviously, for the last little over a year, 18 months, but it takes a couple of years of good prices to fill in the hole that we've done for ourselves. So it takes a little bit of time to fully recover.

And then one more for me. On the Series B buyback, how are you thinking about that as a use of cash flow capital raising versus paying down amounts on the revolver?

So the revolver now is fully repaid to the minimum balance. That was our -- with the ATM proceeds and also some proceeds we had from farm sales last -- at the end of last year. We used that to pay down the line of credit, which is, again, fully down to this minimum balance. And then most of the excess has been going into the preferred repurchase program. So Series B, Series C, we'd love to buy more of it back than we are right now, but these are 2 thinly traded securities. So we're limited with how much we can buy back on a daily basis. But we want to continue making the best use that we can. We're buying back at a 7.4% yield right now. So the common that we raised was at about 5.5%, 5.6%. That's a spread we'll take any day.

And just to remind Max, this is a situation that's ongoing day by day. If you could lob a few calls into the people who set interest rates and get them to push them back to 3.5% where we used to borrow, that would be nice because we could eliminate a lot of preferred stock, and that would help our earnings. Latoria (sic) [Victoria ] , would you come on now and close this up for us? That's the end of the day.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.

Greetings, and welcome to the Gladstone Land Corporation Year-End and Fourth Quarter Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Gladstone, President and Chief Executive Officer. Thank you. You may begin.

Well, thank you for that nice introduction. And this is David Gladstone, and welcome to the quarterly conference call for Gladstone Land. Thank you all for calling in today. We appreciate you take time out of your day to listen to our presentation. Hopefully, we give you some indication of where we're going. Now, we'll hear from Catherine Gerkis, our Director of Investor Relations, to provide a brief disclosure regarding certain regulatory matters concerning this call and this report. Catherine, go to it.

Good morning. Today's call may include forward-looking statements, which are based on management's estimates, assumptions and projections. There are no guarantees of future performance, and actual results may differ materially from those expressed or implied in these statements due to various uncertainties, including the risk factors set forth in our SEC filings, which you can find on the Investors page of our website, gladstoneland.com. We assume no obligation to update any of these statements unless required by law. Please visit our website for a copy of our Form 10-K and earnings press release, both issued yesterday for more detailed information. You can also sign up for our e-mail notification service and find information on how to contact our Investor Relations department. We are also on X @GladstoneComps as well as Facebook and LinkedIn. Keyword for both is the Gladstone Companies.

Today, we'll discuss FFO, which is funds from operations, a non-GAAP accounting term defined as net income, excluding gains or losses from the sale of real estate and any impairment losses on the property plus depreciation and amortization of real estate assets. We may also discuss core FFO, which we generally define as FFO adjusted for certain nonrecurring revenues and expenses and adjusted FFO, which further adjusts core FFO for certain noncash items, such as converting GAAP rents to normalized cash rents. We believe these metrics can be a better indication of our operating results and allow better comparability of our period-over-period performance.

Now I'll turn it back over to David Gladstone.

Thank you, Catherine. Folks, we sold a few more farms during the fourth quarter, which brought us to 6 property sales for the year totaling $95 million in proceeds, and we recognized an aggregate gain from these sales of about $21 million. So your company is in good shape today. After these sales, we still own nearly 99,000 acres across 144 farms, so about 56,000 acre-feet. In case you forgot, I'll translate that to 18 billion gallons of water that we've got stored in aquifers, and so we're in good shape for that part of our work. Our farms are in 14 different states and our water assets are all in California. And right now, there's plenty of water in California. So we're all in good shape from that perspective.

Regarding the two sales we completed during the quarter, one was a small blueberry farm down in North Carolina. The tenant had fallen behind in his rents, and it was a tough property for us to get to new tenants. So while we took a small loss in the sale, we thought it best just to get rid of that farm since it was out of the normal territory that we're in. The other sale was a really nice farm in Colorado, where the lease was set to expire at the end of the year, and we were likely facing a downward rent bump and reset. So we took the opportunity to sell the property for more than we had in it originally and paid. So it was decided to go ahead and take the gain and move from that area of farms.

We may consider selling some additional farms. In fact, we've got several that we're talking to buyers over the next few quarters and this part of ongoing portfolio review. If we're able to complete some of those, we'd like to use most of the proceeds to pay down debt and also to buy back some of that more expensive preferred stock that we have and trigger a gain there. But we're still evaluating the opportunities. And at this point, we're hopeful of a good transaction that will come and show how good we are in buying and holding these properties. On the acquisition side, financing costs, which seem to be slowly moving closer to where we like them to be, but we're not quite there yet. We're hoping interest rates will continue to move in the right direction. That is down. So we can get back to growing the portfolio as we've been out of the business for quite a while. We've got a lot of land that we own, but it'd be nice to pick up some now because prices seem to be moving in the right direction.

We're still taking a disciplined approach to any new investments. Interest rates and our overall cost of capital remain elevated and the capital rates on most row crop farmland is still too low to make it economically work for us today if we have to use a lot of debt to buy it. On the leasing side, first, we've talked about on prior calls due to the market conditions affecting certain permanent crops, particularly nuts and wine grapes, we adjusted the lease structure on a handful of properties to help our growers reduce their fixed costs. And as a result of doing that reduction, in essence, we're taking a larger percentage of the gross crop sales instead of fixed rent payment. We also decided to direct operation of two properties ourselves with the help of third-party operators. We believe a lot of the farms in the United States are just set up like that. So people bring in farming expertise as we are. And well, I'll let Bill and Lewis, the two next speakers talk about that. But overall, we had a successful harvest, particularly with almonds and pistachios.

We're still expecting significant amounts of revenue from the 2025 pistachio harvest to come during 2026. So they're not in there yet. But we won't know the exact amount until the processes of those nuts have their finalized, their settlement with us. I wanted to remind everyone about this modified structure that we're using because we're simple approach to most of these farms for 2026 crop year is going to be exactly the same as we used last year. And I think it's also important to again highlight the role of crop insurance. In these cases, one of the reasons we feel so confident in taking this approach, which is a little bit like gambling on these special farms is their strong history of high production. And since insurance coverage is largely based on historical yields, we're able to secure relatively high levels of insurance.

So to give you an example of this, if one of our crops was that's insured is wiped out by some strange disease or whatever, the insurance allows us to recover the amount of capital that we put into these farms. And that's nice to know that the downside is covered. Our goal is still to eventually transition these leases back to more traditional structure with fixed base rents. But our ability to do so will depend on many factors actually, external factors such as crop productions, crop prices, interest rates, input cost of growing the nuts or whatever strawberries and water availability. We've kind of got the last one covered to some degree, water availability, as you probably read in the newspapers and reports. Water is plentiful in California and the amount of snow in the mountains, which will melt during the summer and run off is pretty good shape.

In other leasing activity, we executed 5 renewals during the quarter. We saw a modest increase of about 7% on two of these row crops as a renewal. For three permanent crops, we reduced the fixed base rent in exchange for additional crop share component, which is what we've done a lot of time. We should have roughly flat compared to those of prior leases on those farms. Looking ahead, we have 5 leases scheduled to expire over the next 6 months. In total, this represents about 3.6% of our total 2025 lease revenue. We're currently in discussions with existing tenants and prospective new tenants about leasing each of these farms. So I'm pretty optimistic about getting those rented.

And now I'll take a quick update of some of the ongoing tenancy matters that we're working through. We currently have 9 farms that are wholly or partially vacant, and we're growing crops on some of these. Encompassing 4 of the farms we've been direct operators under management agreements with unrelated third-party growers. We also recognize revenue on a cash basis for leases with 3 tenants who collectively lease about 5 of our farms. That should be okay. We are actively working towards solution for each of these situations. We think we are close to having a resolution in place for a few of these farms soon. And hopefully, we can get some of them off of this list over the next few months.

I'm going to stop here. We've got Bill Reiman on the call, and Bill is the man who really understands us since he's been working in the farming area for most of his career. So Bill, take it away.

Thank you, David, and good morning to everybody. Yes, much of our current management focus right now is on the properties that are being operated under these modified lease agreements or farmed directly utilizing third-party farm operators. We've completed harvest for 2025, and we're pleased to report that the overall yield objectives that we had in our budgets, we exceeded all of that. And so really good results there. We're renewing some of these modified lease arrangements, particularly on 5 of the 8 farms. 2 of the remaining 3 are redevelopment projects and the last one, our wine grade vineyard in Napa is now leased to a local grower. So we're happy to have that done.

The 5 farms that we ended up, that we're renewing agreements on were really our top performers from this group last year. So we're expecting another really strong year of results. The winter, David touched on a little bit about some recent weather. The winter for us has been about average for precipitation with a couple of our wettest months left to come. Recently, we've had some major storms that really boosted the snowpack levels. So there's significant optimism that the surface water allocations for 2026 will be very strong. Those reservoirs, both state and federal water projects are above historical averages. So for the short term, there's plenty of supply.

Chilling hours, we're projecting a low to medium level of chilling hours this winter in California. It means we should meet all chill requirements in all of our permanent crop locations. So that's very good news. Almond bloom, as of today, we're probably 2/3 complete. The bloom's has been a bit uneven. There's been reports of flash bloom in many locations around the valley, Central Valley. And also with the cold and rainy weather, the bee activity hasn't -- it's been somewhat limited in quite a few areas. This could possibly cause almond yields to be lower across the state.

Pistachios, wine grapes, of course, are still in dormancy. So they've actually reaped the benefit of some of this colder wet weather and haven't had the bloom exposed yet. Markets, tariff drama, trade tensions still exist as we all read the headlines. However, crop markets seem to have settled in and accepted this uncertainty to a large degree. Nut crop markets continue to show notable resilience and strength, particularly for pistachios. The important story lately is the fact that the supply chain seems to be pretty light. There's minimal product in both almond and pistachio buyer side supply chains, which we think has provided upward pressure on pricing. As a result, our base guaranteed price for the current crop remains consistent with 2024, and we believe there's a strong likelihood that the final price for 2025 crop will actually be higher than our final 2024 pricing.

One of our processors, in fact, recently announced an extra $0.50 per pound bonus to be paid with our scheduled April crop payment for pistachios for the 2025 crop, that's really good news. This momentum could also result in a higher base price for the 2026 crop when that gets announced in July of this year. So things are looking up in pistachios. Almond prices dipped in January, but since then, they've rebounded quite a bit and climbing again as we move through boom season. I don't expect these prices to vary too much as there's strong demand and confidence in the market. There will be some slight bouncing around as projections for the 2026 crop start to come out and we get to this point in bloom and everybody has an opinion on what the crop is going to do. So we will definitely see that reflected in the market. But it is -- the market is, in general, severely underbought and the supply chain is light. So those are things and growers are reluctant to sell right now. So those are all things that continue to put upward pressure on almond prices.

Wine grape market continues to underperform, but we're beginning to see some varietals, particularly some white grape varieties that are showing up short in supply. At the moment, this isn't causing any increase in prices or really provide any incentive for wineries to contract for supply, but it is the very first encouraging sign that we've seen in a couple of years. Vineyard removals are continuing at a rapid pace in California and really around the world. So we're hopeful that this pullback in supply will soon bring the market back into balance, likely flipping it the opposite way and will be underproduced. And then the weakening dollars as long as the dollar continues to weaken, that works in our favor, making our products more attractive to international buyers.

Circling back to water, we're experiencing, like I mentioned, we're experiencing a normal to potentially wet year as far as precipitation is concerned. So it's really good news in that we're continuing to experience an extended wet period. 4 out of the last 5 years or 5 out of the last 6 years have been average or wet. Full reservoirs, good rainfall, snowpack. They are all key factors for the water market to be full of water for sale at prices that are attractive for our water banking activities. So we've been working hard to identify the best water deals for our properties and looking for infrastructure improvements that will yield us the best return on those capital expenditures. Our goal, as always, remains to further strengthen the overall water security of the entire portfolio through long-term and short-term strategic water purchases. We're looking to continue investing in water delivery storage infrastructure, pipelines, water banks and then identifying opportunities to create synergies across the farm assets.

Now I'll turn it over to our CFO, Lewis Parrish.

Thanks, Bill, and good morning, everyone. I'll start with a brief update on our recent financing activity. During the quarter, we repaid a $4 million note that was secured by a property that we also sold during the period. And subsequent to year-end, we redeemed our Series D term preferred stock to avoid a step-up in the coupon from 5% to 8% -- that redemption was funded through a combination of common stock issued under our ATM program and a draw on our line of credit. Since the beginning of the fourth quarter, we raised about $50 million of common stock through our ATM program with the majority of those proceeds used to fund that redemption.

Turning to our operating results. For the fourth quarter, we recorded net income of about $4.2 million and a net loss to common shareholders of $1.8 million or $0.05 per share. For the year, we recorded net income of $13.5 million and a net loss to common shareholders of $10.5 million or $0.29 per share. Adjusted FFO for the fourth quarter was $14.4 million or $0.38 per share compared to $3.4 million or $0.09 per share in the same quarter last year. And for the year, AFFO was $14.4 million or $0.39 per share compared to $16 million or $0.47 per share last year.

The decreases in AFFO were primarily driven by the recent changes to lease structures on certain farms, timing differences in revenue recognition related to crop sales in certain direct operated farms, lost revenue from farm sales over the past year and ongoing tenancy issues that have led to vacancies resulting in both lower revenues and higher costs. Year-over-year, fixed base cash rents decreased by about $1.9 million for the quarter and by about $19.8 million for the full year. This is primarily driven by the reasons just mentioned, but mainly the lease modifications on certain properties where we reduced or eliminated fixed base rents or in some cases, provided cash lease incentives in exchange for significantly increasing the crop share components. Partially offsetting that and largely for the same reason, participation rents increased by about $9.3 million on a quarterly basis and by $10.6 million for the full year. This increase was further driven by stronger pistachio pricing compared to last year.

Net profit from crop sales in our direct operated farms was about $2.6 million for 2025, which is our first harvest year. However, the full impact of this 2025 harvest is not yet reflected in our financial results. While we did expense a full year of growing costs, we have not yet recognized a full year of revenues, particularly on the pistachios. As David mentioned, the final marketing bonus payment for the 2025 pistachio crop will be recognized later in 2026, thus creating a timing difference compared to 2024 when this property was fully leased.

In addition, we recorded about $4.4 million of termination-related revenue in 2025, including $2 million in the fourth quarter compared to 0 last year. On the expense side, our recurring cash operating expenses increased for both comparable periods. Total related party fees fell by about $200,000 for the year, and that's primarily due to a lower base management fee resulting from recent farm sales, but was offset by a higher administration fee during the fourth quarter. Property operating expenses increased for both periods and is mainly driven by the cost of supplemental water we were required to provide on one of our properties pursuant to the lease as well as higher insurance costs and property taxes incurred on one of our direct operated properties.

G&A expenses declined in both periods, primarily due to lower professional fees incurred during the current year. And one note on cash flows. Cash flows from operations declined largely due to timing differences between leasing versus operating farms, which is particularly true in the first year of operations. Again, for our direct operated farms, almost all the cash for growing costs went out during 2025, while most of the cash proceeds will be received in 2026. In addition, regarding the increased participation rents from the lease modifications, a significant portion of the cash payments was received in early 2026, creating another year-over-year timing difference in operating cash flows.

Turning to liquidity. We have about $85 million in immediately available capital and over $185 million of unpledged properties that can be used as additional collateral. We are in discussions with a couple of lenders to add certain of these properties to either existing or new facilities. Currently, about 98% of our borrowings are at fixed rates with a weighted average interest rate of 3.39% locked in for another 2.7 years. This has helped shield us from the interest rate volatility we've seen over the past few years.

Looking ahead, we have about $17 million of scheduled principal amortization payments due over the next 12 months. We don't have any loans maturing over the next year, but we do have about $160 million of loans with fixed rate terms that are scheduled to reset over the next 12 months, though the loans themselves are not maturing. This includes $135 million of loans under the MetLife facility that are scheduled to reprice in January of 2027. And finally, regarding our common distributions, in January, we declared a monthly dividend of $0.0467 per share for the first quarter of 2026. At our current stock price of $11.51, this represents a 4.9% annualized yield, which is above the REIT sector average.

With that, I'll turn it back over to David.

Thank you, Lewis. Good report. Nice to know that we're in a strong capital position. We are staying active in the market, so we're ready to go if a good acquisition opportunity comes along. But as mentioned earlier, we're still being cautious on the acquisition front because our cost of capital remains very high. Overall demand for prime farmland growing berries and vegetables remains stable across most of our regions, partially -- particularly along the coast. We also started seeing some signs of improvements in pricing and broader economics around those crops. So we are hopeful that the worst may be behind us, but it's still too early to say whether we are fully in the clear or not.

Overall, in the long run, we expect inflation, particularly in the food sector to continue to move higher, and we're expecting the values of underlying farmland to increase over time as a result. We do expect this to especially be true with healthy foods such as fresh fruits and vegetables and nuts like we grow for people, and we are a big producer these days.

So now I'll open it up to some questions from those who are listening in. Operator, would you come on, please, and show them how they can ask some questions.

[Operator Instructions] Our first question comes from the line of Craig Kucera with Lucid Capital Markets.

I wanted to revisit your commentary regarding the 5 repositioned farms. So basically, are you saying that they're under similar leases where there won't be any base rents and you'll have a portion of higher participation rent expected in '26 and then will some of that dribble into 2027 as we saw this past year? Or how should we think about that?

Yes, that's exactly correct. Well, it's the same structure that -- I mean that they'll be either with no base rent or possibly with a lease incentive, but it will be the same structure as we had in 2025. With the '25 crop, we had a good amount of the revenue recorded in '25 and then a portion carryover in '26, and we'll have the same thing. But 2026, we'll be able to benefit from the carryover from the '25 crop plus the initial payment from the 2026 crop.

And to add to that, it won't dribble into '27. It will be just like most of it. For most of '26 crops, revenue will come in '27. So it's -- it won't be a little bit. It will be just like this year.

Okay. And what was -- I think at the time that you restructured those leases, you thought that I want to say maybe 75% would come through in fourth quarter of '25. When you kind of step back, and I know you've still got some marketing with the pistachios. But as you think about that, what was sort of -- what would you say the percentage was that was recognized here in fourth quarter '25 and kind of what you expect in '26?

It's really on a farm-by-farm basis. I think for the pistachio farms, it probably will be close between the 65% to 75% in the first year, but that is us estimating what the marketing bonus is going to be. It could turn out to be higher than that. And if that's the case, then it would push a higher percentage in the following year. Almonds, a bit of a different story because some of our properties were in, and Bill can expand on this more, but we're in what's called a call pool where we decide when to sell the crops -- and for those -- for example, we have one property for the '25 crop where we haven't pulled the trigger yet because we're seeing prices trend in the positive direction and we want to wait and take advantage of that pricing.

So for pistachios, I think the percentage will generally hold true, assuming that bonus payment stays where it's been, but -- and I'll let Bill talk on this, too, but we are seeing signs of that possibly being higher. So again, that would push the percentage higher in the subsequent year. Bill, anything you want to add to that?

Yes. I mean that's correct. Certainly, on pistachios, we feel the likelihood of increased bonus payments, that's increasing every day. So we feel pretty strong about that. And Lewis mentioned the almonds on the call pool, one particular farm, we decided to make the call of when we'll sell, and we're kind of holding out for some higher almond prices. But in that particular farm, we did get crop insurance payout. So we're already in positive territory as far as whether we made money or lost money on that farm. But we still have the crop -- a small amount of crop to sell, and we're just holding out for higher prices.

Got it. And just one more on this topic. I guess, are you saying then that you would probably recognize more sort of variable payments throughout the year than you typically would because you have more control over when and at what price you sell the crop? Or should we think about this that this will mostly be recognized in the fourth quarter as far as what was earned in 2025?

I think we'll have a little bit more in the first half of the year than we typically do. Just as Bill mentioned, that we do have one pistachio processor who announced they will pay a portion of that marketing bonus early in April. So we will probably be able to pull some of that into Q1. But other than situations like that or maybe further adjustments to almond pricing, we would probably see the most bulk of it coming in Q3 and especially Q4 again.

The other impact if the pistachio market continues its current trend and our guaranteed base price goes up, that will increase the amount that we are able to claim in within this calendar year. But we won't know that until probably the end of -- usually end of July.

Okay. Changing gears, Lou, what are your expectations for interest paid for this year in the first quarter?

I'd expect it to be anywhere from 10% to 15% less than what we recognized in 2025, and that's assuming the percentage of interest that gets paid, that gets refunded is the same, but reflecting just the loan balance decrease over the past year as we've paid off some loans.

Okay. I see you raised $33 million in ATM this quarter. Was the remainder of the Series D funded with cash on the balance sheet or the line of credit?

Line of credit. We currently have about $10 million outstanding on the line of credit, and that's currently at a 5.69% variable rate.

Got it. Okay. Just one more for me. I know one of your competitors have been generating significantly higher returns through lending to farmers and is seeing decent demand there. Given the somewhat tougher farming economy, is that something you guys are looking at a little harder? I believe you capped that type of activity to 5% of assets, but would just like to get your read on that situation.

We've had discussions about getting a loan program started up, but we haven't pulled the trigger yet. It's something that we may continue to discuss. But at this point, we don't have any plans to -- any solid plans to put that program in action yet.

I'll add to that. I was just going to say, I would say long term, that's something we're really keeping an eye on. But I think just current economic conditions, we've been really -- we've looked at some loan deals, but with current economic conditions, it's just something we just haven't -- we haven't felt that the risk return profile was really right for us at this time, but it's something that we continue to look at, continue to get inquiries and probably long term is something we want to, we'll eventually make some moves on.

Other questions?

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

So maybe kind of sticking with the variable rent questions from earlier. With the current season that just closed on pistachios, do you have kind of brackets as to what you think the amount remaining to be collected is just given you have some color into the bonus payments. I was kind of curious if there was a range for what more to expect in '26 you were seeing out there.

Well, as far as our direct operated farms go, we do have -- we are expecting about hopefully, at least $3 million to come in. Now it's certainly not guaranteed, but if we are to use prior year bonus payment as an estimate as a proxy for this year, and all indications are pointing to the fact that the marketing bonus amount should be at least equal to last year. So if that does hold true, then that would result in about $3 million more coming in during 2026. Of course, that could change, but signs today are pointing positive for that outcome.

Okay. And then maybe as I think about your like kind of truly vacant assets, not the ones that you're operating yourself, what are kind of brackets around the value of those 5 properties? And would you -- I guess, how expeditiously could you sell those if you wanted to?

So the ninth -- I don't have the exact book value or fair value, but if I had to ballpark a figure, I'd say maybe $50 million. However, the largest of those properties, 3 of those vacant properties, we are close to putting together agreements that would get those back into an income-producing position. Again, nothing is finalized or fully guaranteed at this point, but we are hoping that those -- the 3 largest of those farms will come off the list, hopefully, within the first half of this calendar year.

And those 3 largest -- one reason that they're vacant and timing is a big factor, right? We lost, the tenant left and trees needed to be removed. But because they were so big, it takes a while to get that done. So a lot of that, the big portion for those being vacant right now is because we've had to clean the farms, so we have to pull the trees out and they're so big, it takes time. But yes, we are -- as Lewis said, we're really close to getting those back into revenue production.

Okay. As a reminder, what is the crop type on those farms?

They were almonds.

Those 3 biggest were almonds. Yes.

Switching gears a little bit. As I think about the Series D repayment having been completed, how are you thinking about ATM usage going forward? I mean was the ATM, particularly ATM quarter-to-date really tied to that repayment? Or are you looking to kind of delever on a more kind of organic basis?

A lot of the ATM usage was for that redemption specifically. But now that that's out of the way, we would like to focus more on the other preferred securities. So if we continue -- right now, we can sell ATM at 5%, we could buy back preferred at 7.5%. If we're able to get a 2.5 point spread on transactions like that, then that's something that we would look on favorably and hopefully be able to implement.

Okay. And then lastly, on the water, how are you looking at kind of your own water kind of holdings, acquiring further water holdings, just giving, now since I've got a couple of pretty strong seasons in terms of precipitation out West, but just kind of curious if that's impacting your strategy there at all.

Yes. I mean it's super positive, right? So when there's plentiful supply, the price comes down. And we -- our driver on buying water is all about the cost, right? And so what we buy it for what it cost to move it and what it costs to hang on to that and hold it for use during reuse in the future in the next drought. And so as these prices come down, I mean, in fact, this week, there's some what we call Article 21 water release being released next week, and that is like prices $50 to $80 an acre-foot. So this is -- these are the opportunities that we jump on, and we try to grab as much of that as we can for the future. So it's all cost driven for us because that's your future water cost for some crop down the road. And the lower we can get that, the better we are.

We have any more questions?

And there are no further questions. And therefore, I'll hand it back over to you.

Well, thank you very much, all of you for listening to this and a little bit disappointed that we're not getting enough questions. We hope you'll mark them down during the year and ask us when it comes up in March or April, whenever we're talking to you again. But thank you all for calling in, and that's the end of this session.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you, and have a great day.

Greetings, and welcome to the Gladstone Land Corporation Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. David Gladstone, Chief Executive Officer. Thank you, sir. You may begin.

Thank you, Latanya. It's a nice introduction. This is David Gladstone, and welcome to the quarterly conference call for Gladstone Land. I want to thank you all for calling in today. We appreciate you taking the time to listen to our presentation. Before we begin, we always ask Catherine Gerkis to -- she's the Director of Investor Relations and ESG.

Catherine, why don't you go with your part now?

Thanks, David, and good morning. Today's call may include forward-looking statements, which are based on management's estimates, assumptions and projections. There are no guarantees of future performance, and actual results may differ materially from those expressed or implied in these statements due to various uncertainties, including the risk factors set forth in our SEC filings, which you can find on the Investors page of our website, gladstoneland.com. We assume no obligation to update any of these statements unless required by law. Please visit our website for a copy of our Form 10-Q and earnings press release, both issued yesterday for more detailed information. You can also sign up for our e-mail notification service and find information on how to contact our Investor Relations department. We are also on X at GladstoneComps as well as Facebook and LinkedIn. Keyword for both is the Gladstone Companies.

Today, we'll discuss FFO, which is funds from operations, a non-GAAP accounting term defined as net income excluding gains or losses from the sale of real estate and any impairment losses on property plus depreciation and amortization of real estate assets. We may also discuss core FFO, which we generally define as FFO adjusted for certain nonrecurring revenues and expenses and adjusted FFO, which further adjusts core FFO for certain noncash items, such as converting GAAP rents to normalized cash rents. We believe these metrics can be a better indication of our operating results and allow better comparability of our period-over-period performance.

Now I'll turn it back to David Gladstone.

Well, thank you, Catherine. I'll start with a brief overview of our farmland holdings as we do every time. Currently, we own about 100,000 acres. It's on about 148 farms and nearly 56,000 acre feet of water assets, which is more than 18 billion gallons. Our farms are in 15 different states and the water assets -- well, all of them in California, that's where it's driest. Our farms are leased to over 80 different tenant farmers who grow over 60 different types of crops on our farms. Most of these are the type of food that you will find in the produce section of the local grocery store, such as fruits and vegetables and nuts. So we're continuing to take a very disciplined approach to new investments, in fact, not doing any except in our existing farms. But no new farms simply because the interest rates are so high that we can't finance them. So we continue to be disciplined as we call it, in investments given interest rates and their cost of capital remains elevated. We're hopeful that the banks will drop their rates in the future.

At the same time, cap rates in most row crop farmlands are still too low to make the economies work. During the quarter, we completed the sale of 1 property consisting of 2 farms within that property. Those are in Florida, the sale price was $21.5 million. This is a transaction representing a 36% premium over our original purchase price and generating a gain of about $6 million. We may consider additional selected farms for sales over the next few quarters as part of our ongoing portfolio review. But we are still evaluating the opportunities and being very conservative every time we look at a new deal.

And now I'll provide an update on modifications that we've made to certain lease structures and some of our permanent crops farms, those are all in the West. As we discussed in prior calls, due to the market conditions affecting certain permanent crops, particularly nuts and grapes, we adjust adjusted the lease structures on 6 properties to help us grow and with our partner, the grower, reduce their fixed costs while also allowing us to participate in the upside since we're putting up some of the money. In essence, we're accepting a percentage of gross crop sales instead of a fixed rent payment. We also decided to operate 2 properties ourselves with the help of third-party operators. One of the reasons we felt confident going this route in particular farms is that their strong history of higher production. Because crop insurance coverage is largely based on the historical yields, that means we were able to secure a high level of insurance coverage on these farms that we're going to hit our numbers. And we more than did that this year in a number of farms. We're still progressing through the harvest that we did for last year, post-harvest activities on our almonds, pistachios and grape properties in this group, but we're wrapping up the pistachio harvest on 3 farms earlier this month, and we're now receiving proceeds statements confirming the volume delivered to the seller or persons that are working for us to sell the different things such as almonds and pistachios, along with the first cash installment. Based on those statements, we expect to recognize about $17 million in revenue in the fourth quarter from these 3 orchards alone. We also received the first cash payment, a little over $5 million.

In addition, subsequent to the quarter end, we transitioned one lease on a large vineyard in Napa, California from structured that included a sizable lease incentive payment back to traditional crop share arrangements. Our goal is to eventually transition all of our leases back to more traditional structure. That is we like receiving fixed-based rents that come in every month rather than waiting to the end of the year to get part of the crop, even though the latter of those alternatives is usually much more profitable than taking monthly payments from someone leasing our property.

In other leasing activity, we executed 2 renewals subsequent to the quarter end, expect to result in an aggregate increase in annual NOI of about $65,000 or about 7% on those farms. Looking ahead, I have 11 leases -- we have 11 leases scheduled to expire throughout the rest of 2025 due to some of these leases containing no fixed base rent and others including cash lease incentives, both in exchange for increasing the participation rent component. These leases actually account for negative $651,000 of lease revenue, but not -- doesn't accrue any of the payments we're going to get from selling the crops in our percentage. And that's largely because of the participation rents resulting from these leases, they won't be recognized until after the fourth quarter. That is when we get the numbers in, we'll know what we made. And I think things are looking good on our nut crops. So, we're all happy about that.

We're in discussions with both existing and prospective new tenants about leasing these farms, including reverting some of these leases back to the standard lease that we started out with, that is fixed monthly rents or quarterly rents, but in essence, not participating greatly in the sale of it. So, the farmer is doing the farming, and we are just leasing to them. But we've got these farms that we've converted over to where we are putting up some of the money and we get a lot of the money coming in from the sales. So, we'll see how that works out. The first one that we talked about looks good. And I think the rest of these that we have in that with the exception of grapes look good.

And now I'll give a quick update of some of the ongoing tenant matters that we're working through. We currently have 6 farms that are vacant and 2 properties encompassing 4 farms are directly operated under management agreements with an unrelated third party. In addition, we recognize the revenue on a cash basis for leases with 4 tenants who collectively lease 7 of our farms. We're actively working towards solutions for each of these situations and are hopeful that a number of them will be resolved over the next -- well, I say several months, but it usually is not working until about 6 months after the year-end. So I'm going to stop here. We've got Bill Reiman online, and Bill is going to give us positive news. Hey Bill, take away.

Thank you, David. Yes, just to expand a little bit on the 8 properties that are under modified lease agreements or being direct operated with third-party operators. Harvest for the 2025 pistachio, almond and grape crops is nearly complete. Pistachios are all in the barn, as we say. And like David mentioned, we did receive our first payment for that crop. Grapes have just a few tons left to pick and some of the almond crop remains in stockpiles as a whole, but it has all been removed from the field. We expect that to wrap up in the next few weeks.

Last quarter, we reported that growing conditions have been nearly ideal and those favorable conditions pretty much continued throughout the fall. We had some higher-than-normal rainfall in the Central Valley of California, but harvest was very smooth and uneventful, which we really like. Our Pistachio orchards performed well above state averages and also exceeded our own internal projections, both crop quality and volume. We had a few almond blocks that underperformed, but the majority surpassed our internal expectations as well. We expect to receive crop insurance payouts for a few blocks that fell short that should make us whole with respect to the growing costs. Fine grapes also delivered strong yields across the board with excellent quality.

Excellent growing and harvest conditions we experienced in 2025 have positioned the trees and binds very well for the upcoming 2026 season. While we still need sufficient chilling hours, winter precipitation and favorable weather next year, and it's early, but we're off to a strong start for the 2026 crop. Irrigation, fertilization practice is already underway, and we'll get started on some curing activities as well here into the winter.

A few words about crop markets. We have tariffs, trade tensions, geopolitical rhetoric continue to create some uncertainty across many export markets. Nut crop markets are showing notable resilience and strength, particularly for pistachios. Seeing stronger-than-expected demand from -- really from 2 specific markets right now with pistachios, the EU and the Middle East. That's significant because it reduces our reliance on the Chinese market. The Chinese market is still extremely important, but spreading the crop around certainly helps reduce that risk.

The result for -- in pistachio, our base guaranteed price of current crop remains consistent with 2024, and we believe there's a strong likelihood that the final price, even though it's going to -- won't be announced for a year from now, and we have a lot of marketing to do, we believe that final price for the 2025 crop will be comparable to 2024 levels.

Almond prices rebounded from their mid-summer dip, returned to the levels we saw early in the spring. Since then, prices continue to trend upward, gaining a few cents per pound each week. Sellers that I talked to, marketers are all enjoying this with pricing and demand just continuing to rise each week, and everybody expects this to continue for the next several months.

Wine grape markets are the opposite, continue to underperform. Strong yields in the past couple of years combined with declining global consumption created one of the most severe oversupply situations the industry has ever experienced. As a result, a lot of vineyards are being removed around the world. At the pace that this is happening, we expect -- hopefully, within the next year, 18 months, we expect markets to start to turn around.

And overall, macroeconomically, the weakening U.S. dollar really works in our favor on all these products that we export, particularly when that’s -- makes our products much more attractive to international buyers.

Lastly, I'll touch on water. Nearly identical report as last quarter. We've been in this normal to wet cycle the past few years, including the most recent winter. We remain focused on enhancing our water delivery storage infrastructure across the portfolio. With these wet years, the availability of inexpensive water is strong. So, we've been very strategic about making those acquisitions. So, we continue to build on our nearly 56,000 acre feet of water assets, positioned several of our farms with enough water supply to meet immediate irrigation needs regardless of weather conditions. So, we feel pretty good about that regardless of how this winter ends up. Storage situation in both the federal systems, we're expecting a minimum of 35% and as high as a 50% allocation if we get a dry winter. So, if we get a normal to wet winter, we expect that to be even stronger. So very positive news on the waterfront.

And now I'll turn that over to Lewis Parrish, our CFO.

Thanks, Bill, and good morning, everyone. I'll start with a brief update on our recent financing activity. During the quarter, we repaid a $10 million bond that was maturing, and this bond was secured by a property that we also sold during the period. On the equity side, since the beginning of the third quarter, we've raised about $10 million through our ATM program. These issuances were made in anticipation of redeeming our Series B term preferred stock, which matures at the end of January 2026. This will allow us to avoid the scheduled increase in the coupon rate from 5% to 8% and also reduce our reliance on our variable rate line of credit to fund that redemption.

Turning to our operating results. For the third quarter, we recorded net income of about $2.1 million and a net loss to common shareholders of $3.9 million or $0.11 per share. Adjusted FFO was $1.4 million or $0.04 per share compared to $4.5 million or $0.13 per share in the same quarter last year. The year-over-year decline in AFFO was driven by recent changes to lease structures on certain farms, loss of revenue from farm sales over the past years and ongoing tenancy issues that led to vacancies, resulting in both lower revenues and higher costs.

Fixed base cash rents were about $5.4 million lower than in the prior year quarter due to the reasons just mentioned, but mainly the lease modifications on certain properties where we reduced or eliminated fixed base rents or in some cases, provided cash lease incentives in exchange for significantly higher crop share participation. And the results from these crop share components won't be known until the harvest is complete and the crops are sold, which is currently underway.

Participation rents increased by about $1.9 million, largely due to the accelerated recognition payments related to the 2024 harvest on certain farms as additional information became available to us earlier this year. This increase was further driven by much stronger pistachio pricing compared to last year. We continue to expect higher participation rents in the fourth quarter of 2025 as a result of the lease modifications we made on certain permanent crop farms. As we discussed on prior calls, these changes have led to lower fixed base rents in fiscal year 2025 compared to '24 and the majority of the resulting crop share proceeds are expected to be recognized as participation rent in the fourth quarter of 2025, with most of the remaining smaller portion being recognized in the second half of '26. So, in essence, we are shifting revenues from fixed base rents to participation rents over the next couple of years. And as a result, most of our 2025 earnings will be realized in the fourth quarter with wider earnings during the first 9 months of the year.

On the expense side, excluding reimbursable items and certain nonrecurring or noncash charges, our core operating expenses decreased by about $140,000 this year -- this quarter. Total related party fees fell by about $110,000, driven by a lower base management fee due to recent sales. And our remaining recurring cash operating expenses remained relatively flat as higher property operating costs were offset by lower G&A expenses. Finally, other expenses decreased mainly due to lower interest expense driven by loan repayments made over the past year.

Turning to liquidity. We currently have over $170 million of immediately available capital. We also have nearly $150 million of unpledged properties we could use as additional collateral if needed. Over 99% of our borrowings are at fixed rates with a weighted average interest rate of 3.39% locked in for minimum 3 years. This has helped shed us from the volatility in interest rates over the past few years. Looking ahead, we have about $17 million of scheduled principal amortization payments due over the next 12 months. We also have about $25 million in loans with fixed rate terms expiring in the next year, so the loans themselves are not maturing.

And finally, regarding our common distributions, in October, we declared a monthly dividend of $0.0467 per share for the fourth quarter of 2025. At our current stock price of $9.24, this represents a 6.1% annualized yield, which is well above the REIT sector average.

And with that, I'll turn it back over to David.

Thank you, Lewis. We continue to stay active in the marketplace should a good acquisition come along. But quite frankly, I'm not sure we're going to do any acquisitions this year, but we'll keep looking, maybe one day one will pop up that we like. But as mentioned on prior calls, we're still being much more cautious on the acquisition front because the cost of capital remains very high. Market outlook. Overall demand for prime farmland growing berries and vegetables remains stable in almost all of the areas where our farms are located. So, a lot of underlying value there in those farms. As mentioned earlier, prices for certain permanent crops have been depressed recently, which along with other factors, has impacted the value of the underlying farmland. However, we are seeing signs of improvement as both crop prices and broader economics of some of these crops. So, we are still in a good position for long term. So hopefully, that the worst may be behind us. When all of the crops were having problems, we clearly were covered by the price of the land that we own.

In closing, we expect inflation, particularly in the food sector to continue to increase over the time, and we expect the values of the underlying farmland to increase as time result. We expect this especially true of the healthy foods such as fresh nuts, fruits and other vegetables, which is the trend in America and all over the world for that matter. Trend is more for people in the U.S.A. eating healthy foods and that continues to grow. Now we'll stop and have some questions from those who follow us.

Operator, would you please come on and help them how they can ask the questions?

[Operator Instructions] The first question comes from Rob Stevenson with Janney Montgomery Scott.

David or Bill, I might have missed it, but can you talk about how that $16.9 million of revenue from the Pistachio harvest was versus what you were expecting? And how does this compare with what that crop would have generated a few years ago?

Well, if you're talking about a few years ago, they were leased. And so, all you would have gotten in is whatever we were charging on the lease. Now we've moved and increased the probability of getting higher rates, who knows. But at the point now, we are probably 2 or 3x the amount that we would have received. So it was a very positive thing that we're getting now from feedback of where the leases have gone, that is from fixed rate to variable rate. And the variable has been very nice. Now we've gotten some nice numbers in. And we believe when you hear us in the fourth quarter, we will have a lot of this ironed out and you'll know what we made on what we invested. That's close as I can get to just giving you a straight number.

Okay. And then, Lewis, the -- you talked about redeeming the Series B. What's the cost associated with that and the timing?

So, the Series D, that's coming due January 31, 2026. Right now, it's at a 5% coupon. At that date, if not redeemed, it goes up to 8%. So, we plan -- at this time, we've looked at all options, leaving it out there, absorbing 8%, which is obviously not what we want to do. Refinancing it is still expensive and also a lot of upfront costs. So, the plan right now is to take it out, redeem it to avoid that coupon with a mixture of common stock and line of credit. We've been issuing common stock at about 6.1%. The line of credit is just south of 6%. So right now, the cost would look to be about 6%, higher than the 5% that the security is currently yielding, but of course, much lower than the 8% that it would otherwise go up to.

Okay. And there's roughly $60 million of debt out there?

Correct. Yes, $60.4 million.

The next question comes from Craig Kucera with Lucid Capital.

I think you mentioned that you might sell some of the permanent crop farms out West if you can't restructure the lease, and you're obviously looking at a number of different options there. But I'd be curious to get your thoughts on the depth of the transaction market out on the West Coast right now.

Well, the banks aren't lending as lower rate as they used to when we first bought these, but they're circling in that direction, and we're hopeful they'll come up with a lower rate. But nice thing about this note that we're paying off is it doesn't come due, it just changes its rate. So, liquidity is not a problem. We know the money is there, and we don't have to give it back. On the other end of it, if we give it back, we cut the rate to 0, obviously. So, I think we're in very good shape. Last year this time, there were some dim moments here in the office as we contemplated what was going on in the marketplace. But today, we have a breath -- I think there's maybe one farmer that's having some real problems, and we may lose that farmer. But otherwise, there seems to be a breath of fresh air in the marketplace out there. And I'm talking mostly about California, other stuff we have in Florida and in the Midwest, they're paying as agreed, and we're in good shape.

Got it. And -- yes. Yes, it does. It does. Just thinking about your commentary on wine grapes, I guess when we think about when you restructured the leases last fall, should we take away from this that any sort of weakness in wine grapes has more or less been offset by strength in tree nuts as far as sort of what you had budgeted at the time you renegotiated those leases?

That's exactly right. How’d you get so smart?

[Operator Instructions] The next question comes from John Massocca with B. Riley.

Maybe kind of thinking about both the repayment of the Series D and just generally kind of the market out there to pay down debt or even potentially even buy back common stock, how are you looking at the disposition market right now? Are there disposition opportunities, particularly maybe outside of California that are interesting? I know you closed the deal in Florida recently. So just kind of curious what potential for generating capital via selling farms there is today?

I think on the East Coast, it's very good. The West Coast is still pretty poor in terms of generating new farmers with lots of equity credit to pay their debts. So, we're still waiting for that to come back. And it has moved in the right direction. But it's still going to take a while for it to catch up where last year was and maybe the year before. John, more I look at that, the more I say, gee, this is going to work out just fine. And I hope you are on the call for the fourth quarter because I think the fourth quarter will tell you whether we made a great decision to go variable rates or fixed rate. That is fixed, meaning we have an amount that we get every month or every quarter, whereas variable, we have to wait until the products are sold. And while they're all growing, this has been a great growing season. There's really nothing going on other than these plants will continue to grow no matter whether -- as long as they're fed water and any kind of stimulant such as some of the things we put on those crops. I think, John, this is a real turning point in this. And we're seeing some really good numbers. And the lady who does all the projections for these crops is sitting here at the table and smiling, and she wasn't smiling a couple of years ago. She was pretty frustrated. We've gotten a new guy out on the West Coast who's going to go to the farms more than we have in the past, although the last person that was there was going to the farms on a -- recently a very frequent basis. And now we're going to have somebody that knows growing and can go out and spot the crops and help us adjust things that needs to be adjusted. This is a great time to be in the business. There are going to be some people that buy crops and we talked to some people. We've had people who want to buy -- want to buy crops, but they want to pay us with promises, and we'd rather have cash than promises. So, we're working hard to get cash in as we have -- how much do we have, Lewis? Cash?

Right now, we have $25 million in the bank and a fully undrawn $75 million line of credit and other undrawn notes as well.

So, we're not in problems’ territory now because liquidity is pretty much assured. We expect the fourth quarter to be a great quarter. We only got $5 million last time we got a payment coming in. I think we'll do much better in the fourth quarter. In fact, we're making sure of that by cutting deals as soon as we can. We have one large farm that a group who's trying to start over again is saying they will buy it from us. I don't know. John, you have to play your cards when you get them. But this time, I think if they come up with the amount of money that we're talking about, it would certainly send us in a direction of maybe buying some good farms. Sure miss the ability to go out and buy farms. It's a different world out there for the nut guys. Not that they're nuts, but they're growing nuts.

I just think on the disposition front, I mean, the Florida transaction seemed like it was kind of opportunistic. Is there more potential for those type of deals as we look into the remainder of the year and '26 to maybe sell more assets either to capital recycle if you do have attractive buying opportunities or to kind of pay down pieces of the capital stack?

Well, certainly, we will pay down the loans in the capital stack. If they're close to maturity, we're definitely going to get them out of the way. So, I don't have any worry about that happening. As Lewis mentioned, the rate might go to 8% unless we do something to get rid of the loan altogether, but the loan itself is not due. It's just the rate is going to change if we don't pay it off. So, we're working on that. And I think we're going to be in good -- once the money starts rolling in from our variable rate charge to some of the farmers, I think we're going to be in extremely good shape. Nothing is taken for granted though. So, we're still praying a lot that things will continue the way they're going in the direction now. And quite frankly, after the downturn that we had in which people weren't eating nuts nearly as much as they had in the past, it was a real shocker when those people didn't step in and order again. They're back ordering now. They're not ordering as much, but we can live where they are now. So, I feel comfortable today. And I just hope our projections are correct. If they are, we will have made a lot of money on the switch from fixed payments to variable payments from the farmers.

Other questions?

And then Lewis, maybe thinking about the Series B a little more, where do you think you are today in terms of having the liquidity you'd like to fully pay that down? It seems like you could, given the availability on the line, the cash today. But I mean, is there any need for kind of fresh capital in your mind to finish that repayment? And I guess, could you also maybe if you wanted to partially redeem it? Or does it have to be fully redeemed or fully kind of left out there to kind of pay that higher rate or that higher dividend yield?

So, a few things there. We definitely could do a partial redemption but having any kind of -- any product in our capital stack at 8% is not ideal for us right now. We -- and yes, we do have the current liquidity to take it out today if we wanted to, but it's at 5% and which is lower than the current cost of capital we would use to take it out it, so it makes sense to let it go at that 5% as long as we can. But the idea between the -- mixing the common stock and line of credit is while the line of credit is a little bit cheaper, based on yesterday's closing price for our common stock, it's variable. So just having to draw less on our line of credit just reduces our exposure to future interest rate volatility there. And as David mentioned, there are some farm sales that are potentially in the works down the line, so that could be some additional capital. But to answer your question, we could take it out today if needed, but it's just a matter of managing interest rate risk and getting the lowest cost of capital and [indiscernible] that we can.

Okay. Any more questions?

Mr. Gladstone, there are no further questions in queue. I would like to turn it back to you for closing comments, please.

We don't like that. We'd like you to ask more questions. It's more fun when you do that. We'll live with it, and we'll see you next quarter and don't miss the opportunity to listen in next quarter and see how well we did in projections. That's the end of this. Thank you very much.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.

Greetings. Welcome to Gladstone Land Corporation's Second Quarter Earnings Call. As a reminder, this conference is being recorded.

It is now my pleasure to introduce Mr. David Gladstone, Chief Executive Officer and President. Thank you, sir. You may begin.

All right. Thank you. That was a very nice introduction, and this is David Gladstone, and welcome to the quarterly conference call for Gladstone Land, and thank you all for taking the time out of your day to listen to our presentation.

Before I begin, we'll hear from Katharine Gorka, our Director of Investor Relations, and she handles the ESG stuff as well. Katharine, give us an introduction here.

Thank you, David, and good morning. Today's call may include forward-looking statements, which are based on management's estimates, assumptions and projections. There are no guarantees of future performance, and actual results may differ materially from those expressed or implied in these statements due to various uncertainties, including the risk factors set forth in our SEC filings, which you can find on the Investors page of our website, gladstoneland.com. We assume no obligation to update any of these statements unless required by law.

Please visit our website for a copy of our Form 10-Q and earnings press release, both issued yesterday for more detailed information. You can also sign up for our e-mail notification service and find information on how to contact our Investor Relations department. We are also on X, @GladstoneComps as well as Facebook and LinkedIn. Keyword for both is, The Gladstone Company.

Today, we'll discuss FFO, which is Funds From Operations, a non-GAAP accounting term defined as net income, excluding gains or losses from the sale of real estate and any impairment losses on property, plus depreciation and amortization of real estate assets. We may also discuss core FFO, which we generally define as FFO adjusted for certain non-recurring revenues and expenses and adjusted FFO, which further adjusts core FFO for certain noncash items, such as converting GAAP rents to normalized cash rents. We believe these metrics can be a better indication of our operating results and allow better comparability of our period-over-period performance.

Now I'll turn it back to David Gladstone.

Well, thank you, Katharine. Let me just remind everybody with a brief overview of our Farmland holdings. We have about 103 acres on 150 different farms, and we have over 55,000 acre feet of water now on acre foot. doesn't mean much to you, but it transfers into about 18 billion gallons that we own, and we have it stored in aquifers and different places.

Our farms are in 15 different states and our water assets are all in California. Our farms are leased to over 80 different tenant farmers, who grow 60 different types of crops on our farms. Most of these are the kind of food that you can find in the produce section of your local grocery store, such as fruits and vegetables and also nuts. We continue to be cautious and have made no new investments because interest rates and the expenses of running these farms are so different now than they were when we first started.

Our cost of capital remains so high and the cap rates on most of the row crops are still high. If you buy one of these farms and then have to farm it, these are very difficult times for the farmers. We didn't complete any sales during the quarter, but we have one property, and that one property is in Florida. We have it classified on our financials as held for sale. This properties consist of 2 farms in Florida that are currently under signed purchase agreement, and we expect the sale to close soon, and that would result in a nice gain for us. By the way, in Florida, a lot of the farms are being sold to be transferred into or reclassified into housing. We're not in the housing business, so we sell our farms when the housing folks show up and need more land.

I want to touch on some modifications we made in our lease structure on certain of our farms. I know we've said this, but I want to make sure you understand it as it has a significant impact on our earnings pattern. I think we mentioned it in the prior call, market conditions around many of these permanent crops in the West, particularly, are those growing nuts and grapes, and we have a lot of price -- crop prices that are different and they're not -- they weren't very high, but this year has a little bit of different legs on it. I'm hopeful we have a lot of almonds, for example, and the government publishes every year their guess of what -- how many almonds are going to be out. The last 5 estimates over the last 5 years were not conclusive, but the government and their projections in the first 2 of the 5 years were.

Well, they didn't get exactly right, but we had more almonds than was estimated by the government. Then the third year out, they were right on target, and then the last 2, we just got -- I tell you, if the government is right this year, we make a lot of money. Anyway, we've decided to adjust the lease structure on 6 properties, and that's why these estimates, we hang on them so much minimize the fixed cost, but also allow us to participate in the upside. We have moved from being a leaser and more of an operator or a grower of sorts because we're taking some of our payment for the lease in part of the crop that is being grown.

In essence, we accepted a percentage of the gross crop sales instead of a fixed rent payment. We did that because it was a very difficult time in the last 2 years, last 3 years really for farmers. We also decided to operate 2 properties ourselves with the help of third-party operators. That doesn't mean you're going to see me or any of the people out there on the farm harvesting or doing whatever. We really have, like many people who are in this business, have hired third-party operators to run the farms.

We'd like to transition all of these back to the more traditional structure, including fixed base rents. Our ability to do so will depend on several external factors such as crop production, pricing, interest rates, input costs have not gone down. They've gone anything to any place in this world, but up. Water availability, that's a key. On our farms, we purchased enough water and stored it so that we're good for many years out.

One of the reasons we felt confident in going this route is that particular farms that we have, we have 8 now that are in this. These are farms that had really good crops in prior years. Because the crop insurance coverage we've gotten, you can buy crop guarantees on your historical yields. That means secure high levels of crop insurance. We have crop insurance on all 8 of these farms. Should a hurricane come through and blow all the things down, we're still going to get paid what we would have gotten paid. We think we would have gotten paid in our existing farms. We certainly hope that even though we're covered with crop insurance, we hope that the base rent is strong production from these farms. They've done so in the past so that we don't need to rely on crop insurance in which our profit could be significant.

Regarding leasing activity, we still have a lot of farms that are under leases, of course, and we're a real estate investment trust, so our leasing is just in sync with that kind of structure. Regarding leasing activity, we entered into 4 new standard leases agreements during the quarter and expect to result in aggressive increase in our annual NOI of about $166,000 or about 9%. That part of the business is working still very well, and we'll see when we harvest the crops that we will own part of will look like in the future.

Looking ahead, we have 14 leases scheduled to expire through the rest of due to some of these leases containing no fixed base rent, including cash leases that we are working. These leases actually account for negative $2.8 million of leasing revenue during the first half of 2024. Remember, we can't put in our estimates even though we have insurance on it, and so those are a negative drag until the crop comes in. We won't know that until the fourth quarter. We'll know a little bit more next time we meet in the third quarter. That's largely because the participation rents resulting from these leases won't be recognized really until we get to the fourth quarter. That's the accounting standards. I don't know why we can't recognize some of it, but that's the rules. And unless you have sold something and are trying to collect on it, you can't accrue any of it.

We're in discussions with both the existing and prospective new tenants about the leasing on these farms, including reverting some of these back to leases on standard leases with fixed base rent. Or if the price is right, we may also look to sell a couple of these farms. As I mentioned, we've got one that's going to get sold in Florida. That's because the housing boom down there is unbelievable.

I'm going to stop here and call on Bill Ryman. Bill is working all of the stuff in California, been hard at work because we've moved from just collecting rents to actually working with the people we hired to farm them. Bill, why don't you come on now and talk to us about that?

Thank you, David. Yes, sure. Good morning, everybody. Just to talk a little bit about the 8 properties that are under modified lease agreements or being directly operated by third-parties. Three of these properties are wine grape vineyards, and with wine grape economics as they are, we hope to recover most of our costs on these. If we break even, that will be a huge win. The remaining 5 properties consist of 2 pistachio orchards, 2 almond orchards and a large property that has both. Based on planted acreage, about 60% of these 8 properties are in pistachios with about 35% of the acreage in almonds. Overwhelmingly, our focus is on these 2 nut crops.

We're very pleased with the condition of the crops on all 8 properties. We expect above-average crop yields and crop quality looks excellent. As David mentioned, we're fully insured on all of these properties. The nut properties have really strong historical production. They all look above -- I would say the crop looks excellent.

We've been working with 5 different tenants or operators across the 8 assets, and all 5 growers are performing at a very high level for us, and they're achieving an acceptable standard to us. All positive stuff there. In addition to that, we had a wet -- an average wet winter this last winter, and the growing season has been, I would say, nearly perfect in the entire Western U.S. That is certainly a factor that we don't control, but we've been very, very fortunate.

Going into crop markets. Generally speaking, we've seen the markets for many of our crops and commodities trend lower in the last few months. Trade negotiations, tariff talks certainly play a major role in this, but traditional supply-demand dynamics are really the main drivers, particularly behind crops such as almonds and wine grapes, which are really important to us. These industries have seen orchards and vineyards being removed at historically large scale. Sometime in the near future, we expect those markets to turn.

Over the past year, we've seen almond markets definitely turn a corner, trending upward. David referenced the USDA's almond objective forecast that was released in July. The number they put out was massive, higher than anybody expected and nobody really believes it. but it caused about a 20% drop in almond prices about a month ago. It wiped out all of the pricing gains of the last year and got back down to what prices were a year ago.

In the last couple of weeks, we've seen pricing really come back. It's up 5% to 8%. That was as of a week ago, and this past week, just this week ending, we're up another $0.03 or $0.04 a pound. We definitely have good almond market momentum, and we expect that to continue.

Harvest just started. We're shaking trees in all of our almond orchards as of right now. Over the next several weeks, we'll start to see how the industry actuals compared to the objective. All eyes are on that because that will support more price gains if we are at a slower rate than the USDA projected. Coffee shop talk as of today, crop is coming in light. That's actually probably good news for us because it will strengthen the market.

Fine grape market still mired in their low points, and it's been slow this summer to get contracts, but in the last 10 days, we've had a number of inquiries on some of our crops for contracts and the pricing is significantly higher than a year ago. There are a couple of positive signals there.

Pistachio is really probably the best market out there right now. Same thing with tariffs and trade discussions have really created some uncertainty, but we see very strong demand, increasing demand. In fact, a little bit of that was unexpected and it caused the 2024 crop to be sold out early. As we sit here today, a month away from harvest of the '25 crop, there's very little movement because there's very little product. We have very low inventories going into 2025, so 2025 is going to have probably the largest U.S. pistachio crop on record, but we have good strong demand and good stable pricing. In fact, our guaranteed base price came out a few weeks ago, and it is the same as last year's, and that's exactly what we budgeted for. We do have one of the unknowns is now known. We know what our base pricing is for our pistachio crops, so that's good. We're happy about that.

While profitability is not nearly as strong as the boom time from 5 years or 10 years ago in pistachios, the market fundamentals are very strong. Generally, we see this increase in bearing acreage, which every year, the pistachio crop grows, coupled with some trade uncertainty, particularly with China. We see those 2 negatives being balanced out by a reduction in new plantings, not a lot of new trees going in the ground, well water pumping restrictions due to Sigma in California that is going to hurt some orchards that have been planted in the last 10 years or 15 years in areas with weak water rights. We're seeing very strong increased consumption in the EU, particularly due to the Dubai chocolate phenomenon. A lot of positives to balance out the negatives.

I'll end it on some talk about water. We've always -- we've been reporting in the past how the Western U.S. has been in a normal to wet cycle the last few years, including this most recent. This has created quite a few water buying opportunities at prices that really fit into our crop budgets. We've been very aggressive and focused on improving our delivery and storage infrastructure across the portfolio. Coupled with the availability of inexpensive water, we've really done a good job of improving the water security of the farms. We continue to add to that 55,000 acre feet of water. We have certain areas where our farms have enough water. If it didn't rain for 10 years, we could still irrigate them for about a decade. We are spending a lot of time trying to figure out how to synergize our properties, coordinate with them with each other where they can share water and just improve the overall security of the portfolio.

We'll continue to do that, looking at long-term, short-term water purchases, improving the -- continue to improve infrastructure and just working towards really having a secure portfolio in that regard. That's it for me.

I'll turn it over to our CFO, Lewis Parrish.

All right. Thank you, Bill, and good morning, everyone. I'll start with a quick update on our recent financing activity. During the quarter, we refinanced a $10 million maturing loan with MetLife, and after quarter end, we repaid a $10 million maturing bond in anticipation of selling the underlying property later this month. We did not issue any new equity during the quarter.

Turning to our operating results. For the second quarter, we recorded a net loss of about $7.9 million and a net loss to common shareholders of $13.9 million or $0.38 per share. Adjusted FFO was negative $3.4 million or $0.10 per share compared to a positive $3.7 million or $0.10 per share in the same quarter last year. The dividends declared per common share were $0.14 in both quarters.

The year-over-year decline in AFFO was driven by recent changes to lease structures on certain farms and ongoing tenancy issues that resulted in farm vacancies, leading to reduced revenues and higher costs, along with lost revenue from farms sold over the past year.

Fixed base cash rents were down by about $6.8 million from the prior year quarter due to the reasons just mentioned, mainly the vacancies we continue to work through and the structural changes made to certain leases, where we reduced or eliminated fixed base cash rents or in some cases, provided cash lease incentives to certain tenants on exchange for significantly increasing the crop share components. As others have mentioned, the results from these crop share components won't be known until the harvest is complete and the crops are sold.

Year-over-year participation rents were also down, and that was largely due to the accelerated recognition of certain revenue in 2024. Last year, some information became available to us earlier than usual, which allowed us to record certain revenue amounts in the first half of the year. So far, this year's participation rents have mostly come from cash collections on wine grape sales. I will note that we continue to expect higher participation rent levels in the second half of 2025 as a result of lease modifications we made on certain permanent crop farms.

We discussed this on prior calls, but these lease changes are expected to reduce fixed base rents by about $17 million for fiscal year 2025 compared to '24. This figure includes both the base rents recognized last year under prior leases, plus the cash allowances provided to certain tenants for the 2025 crop year. It’s being shown as a reduction in fixed base rents at a rate of roughly $4 million to $5 million per quarter in 2025, which is in line with the first half of the year.

In turn, the majority of the resulting crop share proceeds from these leases is expected to be recognized as participation rent in the fourth quarter of 2025, with most of the remaining smaller portion being recognized in the second half of 2026. In essence, we're shifting this revenue from fixed base rents to participation rents over the next couple of years, and as a result, earnings this year will be more heavily weighted towards the fourth quarter with lighter earnings during the first half of the year.

On the expense side, excluding reimbursable items and certain non-recurring or non-cash charges, our core operating expenses decreased by about $200,000 this quarter. The capital gain fee that was triggered in Q1 by property sales was reversed in Q2 due to additional losses incurred on certain asset dispositions. Excluding this reversal, total related party fees fell by about $67,000 driven by a lower base management fee due to recent farm sales. Now the capital gains fee, if any, is not payable until after the end of the fiscal year and is subject to further adjustment throughout '25 if and when we dispose of additional assets.

Our remaining cash operating expenses decreased by about $135,000 with lower G&A costs partially offset by higher property operating expenses. The increase in property operating expenses was largely driven by additional costs incurred to protect water rights on certain farms in California as well as higher expenses related to farms that were vacant, direct operated or on non-accrual status, particularly increased property taxes, which were previously the responsibility of the former tenants.

The decrease in G&A expense was mainly due to lower shareholder-related costs and reduced professional fees. Finally, other expenses decreased mainly due to lower interest expense driven by loan repayments made over the past year.

Turning to liquidity. We currently have over $150 million of available capital, and we also have nearly $170 million of unpledged properties that we could use as additional collateral if needed. Over 99% of our borrowings are at fixed rates with weighted average rate of 3.39% locked-in for another 3.3 years. This has helped show us from the impact of rising interest rates over the past few years.

Looking ahead, we have about $17 million of scheduled principal amortization payments due over the next 12 months, less than 4% of our total debt. We also have about $11 million in loans with fixed rate terms expiring in the next year, though the loans themselves are not maturing.

Finally, regarding our common distribution. In July, we declared a monthly dividend of $0.0467 per share for the third quarter of '25. At our current stock price of $9.14, this represents a 6.1% annualized yield, which is well above the sector average. We're maintaining the dividend at its current level for now, and we'll reevaluate it in the coming months as we gain more clarity on the 2025 harvest results.

With that, I'll turn it back over to David.

Okay. Thank you, Lewis. I think everybody is getting the gist here. We have changed when we can recognize income, and we won't recognize -- we recognize very little in the second quarter. Hopefully, in the third and fourth quarter, certainly the fourth quarter as we sell a lot of our crops, we'll be back in the game of lots of profits.

One thing you may not know, I didn't realize it was going on, on Friday until I got a call from Lewis and our legal team. There was a group out there trading on the market with dollar sign LAND. These me players were just having a lot of fun playing with each other on the price, knocked about 1 point off the price of our stock. It was not good for us, and it takes a long time to get back from these [beam] stocks and be regular traded.

Going back to the acquisition outlook, we continue to stay active in the market, and we are seeing a lot of changes that are going on in terms of what farmers are able to sell their properties for. I think we'll be able to sell some more properties over time. Again, just moving in the direction we have to based on the way we're operating the company now.

With cost of capital remaining so high, it really worries me that the marketplace is going to have to go through some changes. Overall demand for prime farmland growing berries and vegetables remains stable and among all of the areas where our properties are, especially along the coast of California. As mentioned earlier, prices for certain permanent crops have been depressed. When we say permanent crops, we're really talking about the nut business, a lot of trees out there. The only good thing about all of those trees is they're harvested mechanically. We're not really being bothered by the impact of any changes in how much you have to pay people to pick crops. We still worry about that because so many of our properties are strawberries and other things that are done quickly and shipped quickly. For us, where problems for us has been the fact that we can't recognize any projected income. Now we're all sitting twiddling our thumbs trying to figure out when we're going to be able to get some real transactions done.

As Bill mentioned, he mentioned that they are now starting to sell and deliver some of the crops, the nut crops. I don't want to sell any right now, and Bill wants to wait to see what the crops really look like. We all expect inflation, particularly in the food sector to continue to increase over time. We expect the value of the underlying farmland to increase over time because the crops can go up, and so as long as they can make money, people will continue farming.

We expect this to especially be true with regard to healthy foods such as the fresh fruits and vegetables we grow as well as the nut crop. Trend of more people going toward eating healthy foods and especially the new HDA guy is, let's face it, he does not like all the garbage that our people are eating and it leads to a lot of problems in the population. We expect Mr. Kennedy to continue to ring about that. I think it's good for us because more people buy healthy foods like nuts, like berries. We have the largest farm that's based on cabbage of anybody I know. So as a result, that's still making money.

Now we'll get some questions in rather than me bumbling along or we'll get somebody to come on board and ask some good questions.

Our first question is from Gaurav Mehta with Alliance Global Partners.

I wanted to follow-up on your comments around participation rents. The $17 million that you guys talked about, how much of that are you expecting in 4Q of '25? How much you're going to go to next year?

The $17 million, it's difficult for us to say right now because we don't know what the total number is going to be if, for example, we have a poor harvest results, then the participation rent that's coming from those leases could be less than that amount. If we have a great harvest, great pricing, then it could be higher. The split between this year and next year, I think we're penciling probably about 60% to 65% this year and the rest would be a little bit throughout the year, but most of it would be probably in Q4 of next year.

The way these leases work, would they automatically go to fixed rents or they're going to get renewed at the participation rents?

They never automatically convert to fixed, and so we'll have to negotiate that again when the time frame comes up, and that's usually before this year-end, this calendar year-end.

Yes. These leases end later this year. We'll be renegotiating them. If we can come to terms on a standard lease, that's great, but if not, then we may have to continue the structure for another year.

Then maybe switching to the balance sheet. Can you talk about your expectations for the Series D that's up for redemption in January of '26?

Yes. We're still keeping our options open. We're in touch with underwriters. We're talking internally about cash availability using the line of credit. Our options are we could pay it off with potentially with proceeds from property sales, the line of credit that is about 1.7% lower than the rate that the Series D would go up to. We can let it sit out there. It would go up from 5% to 8%. At current market rates of refinancing, that still is probably a more favorable option just in terms of what the refinancing rate would be, plus all the upfront costs, commissions and whatnot. Right now, we're still assessing things internally, cash availability, line of credit, seeing what makes sense to do come January, either pay it off or let it sit out there for a little bit, sell properties and pay it off.

Gaurav, it's one of the things that's so good right now is that the possibility of us making a lot of money from selling these products. For example, we could make just best guesstimate right now, $8 million from selling one of our nut crops. For us, we've watched people do this for a long time. Unfortunately, the cost of capital and also all the changes that have gone into the farming area, just destroyed a lot of our wonderful tenants.

One fellow, I remember, made a lot of money in years past, but now has lost about $8 million because of the changes that have gone, so we want there to be a big crop and everybody to make money. The other thing that goes on is when you have a big crop, you have prices go down. If you're first to market and sell it off, they can make more money than if you wait. Right now, we believe that this first tranche that's coming in, first buyers coming in, there are people that are way behind and need it because they don't have. If you're in the candy business and you need a lot of nuts, you got a problem. I don't know where they're going to get them from, but it's going to be very interesting. I think you're going to see the prices move up pretty fast during the next year.

From my standpoint, I think we're going to see an influx of a lot of people who want to get in the business of growing crops in the nut area. The nut area has been difficult for us. We caught it just at the wrong time. Now, it's coming back, and it will help a lot if the ones that have bought a lot of nuts on the international field like, all of the people that are in this business are very dependent on the Chinese to buy a lot of nuts and they're very dependent on other countries.

I was surprised when I read all of the reports on this, that a lot of the crop that we grow on the almond size are sold in Spain, sold in a lot of the Middle Eastern countries. For us, we normally don't have much on the international area. For example, in growing strawberries, those are grown and consumed here very quick. And so as a result, they never get to the international market.

For me, it's a different area. I don't like it as much as I do the regular leasing business that we have been in since the beginning. I think over time, as the profitability comes back to the markets in the nut side, well, we'll just convert back to leasing. looking forward to that because I like that part of this business better.

Other questions, Gaurav?

Yes. Maybe lastly, you talked about some positive trends in almonds and pistachios. I was wondering, is there any other crop type within your portfolio that's not seeing positive trends is still seeing softness as far as prices are concerned?

I think that's true. Lewis, anything to ad?

Bill, do you want to give some commentary on that?

The question was, are there other crop types showing weakness or softness in the market? Was that correct the question, Gaurav?

Yes. I guess, Lewis, you talked about positive trends in almond and pistachios. I was wondering within your portfolio, is there anything else that's not showing positive trends?

Not really. You have the ups and downs in some of the annual row crops, but those are just kind of the normal whims of the market, so to speak. Those are usually driven by weather events in the short term, whether it's freezes or excess rain or heat spells. In annual row crops, our leases are -- we're not tied to the crops. There just isn't a -- we just don't have anything like that. The markets that are important to us are the permanent crops because even in standard leases, a component of those leases is crop share. That's always had a bigger impact.

Our next question is from Steven Dumanski with Janney Montgomery Scott.

As discussed earlier in the call, with potential acquirers currently limited by their respective cost of capital, is it possible to project when you'll see more disposition opportunities? Also perhaps, in terms of the feedback that you have received from any potential buyers?

Well, certainly, there are buyers out there, but they're all looking at very discounted prices for farms. They're coming in trying to gobble it up. That's nice that they're there, but it's not something we're going to utilize our sales on. If you continue in Florida, I don't know, somebody mentioned there were 10,000 new families every week in Florida. Housing marketplace is going great, and we have people contacting us about paying a much higher price, but further down the road. I don't want to tie up our farms in that. As long as they're producing a good amount of rental money, I want to stay in that part of the business. We're watching it.

I'd say we're probably one of the thousands of farmers that are tied to your radio broadcast on farming prices every day. Bill is probably as close to it as anybody. He's in California. He's in touch with all of the farms we have out there. He is our resident expert on prices. We listen to him when we get ready to sell something. not as -- we still got some properties in the Midwest that we picked up along the way, and those are being put up for sale. We're going to sell them and stick to our knitting, which is things in the East that are related to our leasing business as well as these 8 farms that we have that we are really becoming farmers and haven't given a straw hat to everybody yet, but they all know that we are highly dependent on the price of commodity crops now.

Then lastly, can you please expand on the decrease on a quarter-over-quarter basis for the acre feet of water you own? Just want to see if the variance was based on a remeasurement or other factor.

No, that was just -- I think it was a 44-acre foot decrease quarter-over-quarter. That was just because we used a small amount. Now we record water credit recognition in the quarter in arrears. This is really reflective of water usage in the first quarter of the year, but it was just some tenant transition on one property, working to get wells transitioned over from different accounts, power company, everything, but the trees needed watering right then. We just used a 44 acre feet of water on -- that we had stored to get the trees irrigated while we were working to get the wells transferred over.

We have a question from John Massocca with B. Riley Securities.

Maybe sticking with the theme of water. What are you seeing right now in terms of the impact of Sigma at some of your properties? Has that kind of largely played out? Or do you think there are certain specific assets that for whatever reason, maybe don't have -- where your bank water would maybe be less useful that are still at risk? Has that all kind of -- all the regulatory changes, all the water needs already been determined? Just where are we in that process?

No, there's still changes coming from Sigma. So far, we seem to be ahead of the curve on that, but you never know what the government is going to do. They're meeting -- there have been lawsuits that have been filed by groups of farmers. In fact, I think we are one of the participants in one of those suits. If the government gets a little [anti] and starts favoring some of their friends and that makes it very difficult to figure out what to do. Right now, we are in good shape. We're not in excellent shape, but I don't think we got any problems coming in the water side this year. This year has been a good year for us.

I think, quite frankly, most of the farms could stand 2 or 3 more years without good year-end. Water prices, I think, are going to hurt some people if we get a dry year this year, and we are not going to have that problem. You're right to emphasize the water side of the business because it's not as important as the trees, but the water for the trees are very important, and you can't grow strawberries without a lot of water and a lot of the vegetables are very heavy in the water side using water, but we do most of our heavy water growing in the East, and certainly in Florida, you stick -- a stick in the ground and water comes up because it's so low down there.

At the end of the day, the worry for water is all over California, and we seem to be in great shape. Thanks to the team that has found water at a reasonably low price, and we bought it -- and we stored in the aquifers. We've become big holders of water in the aquifers. We did during the year when it was raining so much, so we built up some of the farms that we have and poured water from the creeks and other places into that. In fact, the kids that are doing that for us were laughing really hard because they kept calling it Lake Gladstone. We have a lot of water out of the ground. It goes pretty fast. While we have 18 billion gallons, you just never know how dry it's going to be. Right now, weather in California is beautiful, but it's great for growing as long as you have water.

Bill, you got anything you want to say about the water?

John, it’s great question around Sigma. Our philosophy from the beginning was to -- we decided from early on, like we didn't know what the restrictions were going to look like, and we knew it was going to change over time, but we started out like, okay, we're not going to follow an acre. We're going to figure out how on every farm is affected by Sigma, but we're going to figure out how do we get supplemental water. The focus immediately went to a long-term viewpoint on it. That's why the investment in delivery infrastructure, identifying groundwater basins where we can store water.

Then we've been very fortunate in having some wet winters that has made a lot of water available at very good pricing. That's been how we've attacked it. We put ourselves in a really positive position. I would say one of the of all of the land portfolios in California owned by different folks, particularly investment companies, investment funds, I would say the water security of our portfolio is one of the best. We just continue to do that as things evolve. We've been involved in 2 water adjudications. There's probably going to be another 1, maybe 2 that will impact us, but our focus has really been on the -- rather than the fight over initial allocations, it's really been on, okay, let's assume we have this allocation, what are we going to do to supplement and focus on projects that will help us replace some of that.

Yes, the big impact on Sigma that we've really are trying to work around, work to avoid is, we're starting to see land values bifurcate. Properties that have really weak water access are really dropping in value, properties that have extra infrastructure in a really good water district, those are maintaining value and even possibly increasing in value. We're really seeing the real estate market follow how the impacts of Sigma.

I would say our team out here, the West Coast team probably spends 70% of its time, 75% of its time on Sigma-related issues.

One thing I'll add to that, John, is for the past 3 years or so, as we've said, we've had wet average years out in California, which has made, as Bill said, a lot of good buying opportunities. Now those buying opportunities have been there for every farmer out there. Most farmers don't have the infrastructure that we've built for these groundwater recharge facilities or water banks as we call them. Everybody has been able to buy the water, but most growers don't have anywhere to store it like we do.

We've even had neighboring landowners asking us if we can store water for them in exchange for some cash payment or leaving water behind. It provides for a small revenue stream in addition as well, but really, the benefit is that the water that we're storing is going to put us at a huge advantage when the next drought period comes. Not that we're looking for a drought, but right now, we have about $35 million of cash that's been invested in these water assets. That's an average of about $600 per acre foot. However, if you compare that price to what the last price for water was at the end of the most recent drought, it's about 1/3 of that price. Again, not that we're wishing for a drought, but that's when we're really going to be able to recognize the benefits of all this water we had stored up.

We know droughts come. It's inevitable. Like we know it's going to come. We don't know when, but we know it's going to come, and it's going to be the worst drought ever, and we're just being prepared for that.

Maybe kind of building on the operated properties a little bit. Is there a level that you think would be a floor based on the crop insurance you have in place today for the impact on probably 4Q revenues?

I'll say that the -- not necessarily for Q4, but overall between these 8 properties, we've invested about $25 million into the cost of the -- of growing the crops, and that includes the $17 million, that's just from those -- from the 6 properties that we modified the leases. There's also 2 properties that we're directly operating ourselves with the help of third-party operators. But about $25 million have been invested between those 8 properties in total and insurance would -- I think it would cover all of our costs and maybe provide it with a small profit.

The split of that, I would say it's probably a similar split from the question answered earlier, probably about 60% to 65% this year with the remaining next year. I mean that is a worst-case scenario, meaning we can't harvest any crops and we can't sell them, which we already know is not going to be the case yet we aren't going to have a total crop loss on these properties, but yes, crop insurance would cover the cost that we put into these properties.

I'll add a quick note to that with the crop insurance, and there's, look, there's a lot of nuance to it. Generally speaking, the better the property, the better performing property because it's based on historical, but the better performing property, the better the crop insurance. There's this little bit of irony where the best the most well-insured situation is probably a property that's never going to experience that because they're really good performing properties. When we say we have good crop insurance, that should tell you that those assets are above average. They beat industry averages, and they're just good performing assets.

Then last one for me on the balance sheet side. Given you have more of an operating component, at least in the near term, how comfortable are you -- I guess, where would you want to see that cash balance stay at a minimum? I'm just thinking about it in the context of you have a decent amount of cash still on the balance sheet, could be using it to pay down debt maturities. Just should we expect the cash level to try to stay near where it is today? Or could you continue to use that to pay down debt as it matures?

Well, I wouldn't look at the cash level, it's more the overall liquidity we have, and as of 6/30, we had $30 million of cash on the balance sheet. We also have an undrawn line of credit for -- well, actually, we have 2 lines of credit that total about $87 million. Those are immediately funds available to us. We also have other undrawn notes. Right now, we're looking at about $150 million of immediately available funds to us.

If we had to operate all of these 8 properties again, then we would pencil in at $25 million for that. We have $17 million of principal payments coming due. We want to maintain probably at least $50 million of availability for the next 12 months at all times, and we're well covered there. In addition to that, we also had $170 million of properties that are unpledged that would give us another $100 million of borrowing capacity if interest rates got attractive or if we needed it for other reasons.

There are no further questions at this time.

Well, that's a shame. We like answering questions. We hope you guys will set up some good questions for us next time, and we expect that we're going to know a lot more about these farms at the next session that we have. That's the end of this conversation, and we thank you all. See you next quarter.

Thank you. That will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.