Farmland Partners (FPI) 4 May 232023 Q1 Earnings call transcript

Hello, everyone. And welcome to the Farmland Partners Inc., Q1 2023 Earnings Call. My name is [Chaquan], and I'll be the coordinator for this conference [Operator Instructions].

I would now like to hand over to Luca Fabbri, President and CEO to begin. Please go ahead.

[Chaquan]. you, Thank Good morning. Partners webcast. Farmland quarter conference the earnings first and to call welcome And We to more very the this taking format releases. thinking truly you appreciate in strategy time public share you we the filings them and press our to formal call, see join than as opportunity a and important less with our interactive because for us and over Christine remarks. now turn the Garrison some will our Counsel, call I General preliminary for customary to Christine?

everyone to distributed on call. you, yesterday. Luca, section you Thank Web under first posted was thank release of press earnings The been site presentations. our relations the after the announcing the has and The closed investor sub to our and supplemental header quarter package market events

the we X, May to updated listen this made this of remarks the call. who be remind that and and those our of presentation, here subsequent will not For to as you XXXX today recording

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

which which quarter X-K is in the or uncertainties, measures, comparable to cause We risk actual Form Definitions our EBITDAre in available review included X, subject these report and to income, furnished to risks release furnished exhibit earnings, in our are May beyond materially and we These is well and GAAP results an risks are are generally will have can of as we current including release adjusted measures statements listeners factors Web these many with and dated yesterday press first current announcing farmlandpartners.com XXXX. non-GAAP filed documents SEC. also as that to most differ the discuss the FFO, to from expectations certain and uncertainties distributed reconciliations control. our to advise on site, and press company's on Listeners financial as EBITDAre. difficult and to the certain discussed operating are net predict adjusted our FFO, cautioned non-GAAP our of measures

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

Thank Christine. you,

So as sales and frankly or our show. assets It appears on two us from return the yield us the mistake. third values yield. and a half an class highly and and are to is one from valuable asset will comes roughly Farmland been and where made living based farms because we've highly clearly comes on the much price of of markets very we I Farmland. a asset find ourselves of won't very, generally. strong economic being continues are course tough incredibly reflects day. generally, for But sold in bought in market is turmoil in every all to high, Farmland the markets lenders Farmer the talk it. the current that so in current month Farmland on of with that the asset farms only profit the lending the our about environment be stock exception last the The liquid but has sort class market always you're an the a class deep side, turmoil every be are always appreciation actively thirds that as and and

discount stock. is difference a values that $X.X to It created and very the $X.X The about our our what huge substantial We approximately a prices our down high farms in us at market at stock assets is worth. pay that stock appears is buyback discount it's billion. at sell will The continue to private to debt. market assets at our values trading what billion,

term long sell to going of our and yield of view we're assets of those kinds really function appreciation The assets. on are a

-- forward if not does those in profile other have are strong as offers. strong our think assets that a we going if have return sell assets look We as assets to of set portfolio, a we we will

that As tied not farm. we've to said a emotionally we're any always business,

refuse to to we someone speaking, a appreciate if future makes are So farm it. sell trim farms of have to portfolio up we trying on offer a as the those we is Related will water the rapidly assets would, lead you love in own. But even farms this risk. that will term can't that as long us other the for course, probably generally we process we from that not that lighten think

of stock. done $X.X we sales sales sold have of under are million we occurring so what those already strong contract $XX debt repurchase have compared for closings we've approximately very paid have price far XX.XX. farms, have all gains Today, of bought These about occurred is and to have have down for at million an we we $XX proceeds at auction and average summer. will spring million back and million So the we approximately this $XX slated on, go what to pay The shares farms.

at. buyback to what until gap we stock closed have we the believe our value and is price it’s fair between the continue will stock of trading the We

make to So to will over with turn I that, additional Luca Fabbri some the comments. call

kind of further I want bit Today, little of couple to passing. that's down something in a mentioned minutes in drilling a already Thank you, of just spend Paul. kind

are different are in kind in specifically marching Specifically, drummer to farmland particular environments. really in these agriculture and of markets we general and seeing these a

turmoil, uncertainty, the second The strong. a we looking incredibly farm in of terms XXXX and profitability. and farmer around we are economy projects to As general be of USDA lot or markets ever best year in agriculture a see lot of

and any in mountains melting. in to portfolio is of crops, are albeit concerned, going as impact And at pricing And agricultural situation difficult definitely going the But the so this the specifically economy widespread is as little crops soybeans. per And up. practices, for that is monitoring lot is a a damage, is row context to uncertainty was insurance of farmers so huge specifically or at and revenue for a technology corn there. farmers of is the Looking because the row of at thanks about specific both and for statement the snowpack we the we pretty widespread acre crop set profitability far see the has about bit permanent of highest continuously to as benchmark crops yields as California. widely closely crop for flooding our the used it's is precipitation ever haven't as second more and one up in predict farm the that the been industry that third overall spring we far far diversity specifically, in there make health seen the concerned, our the portfolio of level

to On appreciation, the a blistering in year Farmland half if market not last specifically, prices seen years. a the and have two significant,

So slowed they very down increases. maybe strong. itself appreciation huge or The the the be we've flattened after steep seen continue to after has gains that

have has are high already couple a transaction their little scarcity of down down much bit, mostly there of sell it bit. the slowing prices Whoever We pretty farm for of years volumes a last quality markets sale. thinned because the seeing to assets because therefore sold wanted the in and is a

very that important specialist the -- much this Another to point business. are for wanted lenders that out market operating open thing I and is in the

completely are the usual. of was the estate even very estate but not market as is are to real lending in frankly in when transaction was So credit kind healthy. business when real healthy that we markets only agriculture markets overall frozen, it saw very absolutely This the similar situation XXXX except

what's bank not though that. really is impacting of the really P&L, farm forth, familiar low stock price the not so overall failures are leveraging and in more so macro now, the interest the factors. it's market And very with that also the specifically impacting and right of Paul uncertainty on It's industry wide down much. rates, even teens as I'm economy and than going to therefore, list, you're it's with global affecting and So rattle said, turmoil mostly our us our rates is course,

kind committed and the where between creating for a private in little a liquid asset in and our stock this strong economy healthy, and the arbitraging very the effectively that market uncertainty turmoil shareholders in very in public we scenario to market and So Farmland markets active value market very confused. we're much of overall see farm turmoil, is

that, call James? his With financial the for over James turn I'll now to company's Gilligan company's the overview the CFO, performance. of

including Thank the number and my items summary of to cover of capital XXXX, supplemental up quarter today, the for rates, refer comments. detail XXXX. in structure and I first review I'm guidance and updated will interest revenue of of you, build Luca. to package going a

our information of page the reminder, and press X investor numbers in presentations. contain the a Web header under the through available and XX section supplemental events sub contain Page and release is site relations related supplemental XX financial information. to X the the numbers As

I'll First, metrics that appear on few X. a Page financial share

for months for per stockholders to increase $X.X 'XX, a income was million of common $X.XX $X.X million. compared share to increase million million. share compared 'XX, three an $X.X $X.XX the XXXX, $X.X to XX, ended income For to net was compared March was Net $X.X of available 'XX, of average AFFO $X.XX. million per to weighted 'XX, decrease the for a compared $X.XX million decrease $X.XX. for an AFFO was $X.X $X.XX

the general $X.X legal were we'll of by minutes a of property that in should expenses. driven tenant cost tax by property but XXXX, in lower noted you'll In changes be other $X.X and of income reimbursed goods make the tax to expenses to by million side. XXXX to is QX driven That lower comments increasing compared and revenue It that of review in accounting X, couple by expenses, expense sold, operating amount. XXXX. to same $XXX,XXX. will and higher QX approximately couple if We tenant compared on onetime expense Page million compared dispositions up was operating a administrative were QX expenses XXXX by on gain a reimbursements XXXX, expenses and turn

in due $X.X While compared QX interest higher expense to XXXX million to rates. was higher

about ahead share Fully of shares. make at XX.X XX, Next, Friday, of Page to Total XX, March million to couple comments was $XXX.X April I'll structure. was skip diluted XXXX million. last capital debt XX as our approximately a count

Mid America table at million $XXX facility the at of the Rutledge XX. end quarter. credit Page had in facility, Farm undrawn the the look on Credit bottom MetLife of Between of excess the we credit the number first capacity and you If

rate to million approximately shown in million of in we would seven the that XX. the be had These In X.XX%. has four, one, renegotiated quarter, the on In discussed goes the first quarter, MetLife of in without increased we XXXX. principal the reset debt million second also The loans into representing rates numbers penalty, table. six, loan up reset as seven effect previous This June. $XXX of to million per rate of to five, loans year. the for and prepay have number week As balance XX% $XX.X $XXX to or quarters, MetLife first $XXX resets loan have original flexibility agreed

have will SOFR that the It XXX. $XX under from XXXX. reset should X, plus be over SOFR XX of a approximately noted quarter effect rate SOFR plus to The in that credit number into XXXX. XXX had Rutledge loan decreased in line also spread We that Farm went April million decrease fourth the the

talked variable to income categories profit shown an business We of presented table top turn other to in in This provide the the our In effort easier an the I understand. Page is payments, XXXX, operations, Page numbers about gross on to make items. and will direct overview XX XX. payments, Next, we fixed to statement.

to blocks However, building difficult detail made little a may the different this not out that model have because categories. presentation did the it comprise business, the it

increased the describe GAAP the XX, you the properties that you one A for XXXX decreased a and columns, periods. acquired the on in down up The project commenced points the reimbursements differences in items and Page periods; between first we with can year; what solar what up categories, that see tax Reading between of blocks, highlight leases its bottom assessment the second are; the to Illinois the State and the for on It makes rows few to comments GAAP, quarter fixed described farms at as shows just the table supplemental building periods quarter. Page XX revenue building between the makes rent see related XXXX the farm that. lineups. both disposition the the construction large renewed late tenant can the XX tenant supplemental to categories. of with in does compared occurred line last with blocks across XXXX property increase phase reimbursement as in $XXX,XXX and XXXX the increased of ones time everything shows first of these the

buildings under quarter fourth we accounting classifies agricultural of The for the the those dealerships In treatment financing land Deere John as and acquisitions equipment XXXX, acquired brand. in transactions. Ohio

in all of on grapes XXXX where our quarter crop This cost the So sold, to colleagues lower subsidiary a were because they Associates and auction to first decided is accounts primarily Wise payments sales but $X.X nearly did crop million sales, increase be This the brokerage million on compared lower as to loans earnings sell, citrus. job payments and appear income row the in interest a of accounts the large together on the period insurance was $X.X particular in combination QX shortfall the during the caused transaction XXXX. lower our the topic $X.X in on XXXX, was operations down covered for is not due the It XXXX, at million that lower compared yields the compared between noted income seller to Other in of periods. we call. should items by in due and farms. income. statement decreased and and all quarter in to first of balance lower last quarter largely goods insurance crop largely Direct sheet crops, expected there crop a harvest down great interest Murray of the activity to for as Variable XXXX. performance the

Page page, XX we side. those Page next using the the for XXXX XX, On building described blocks the have outlook on same revenue on

$X at and bottom page, we back. the $XXX out the estimate in listed some approximately the the in of assets results from and few first $XX may sell described actual shared and to neighborhood million million We note sold February. There's projected Paul are over of that I'll in quarter of a back the changes are Assumptions entire minutes and as the to million year projections differ. numbers

revenue of projected side, of a decrease as $X.X has rent farm approximately million the On to result net dispositions. million fixed the $X a

Other recreation due revenue No quarter sold items revenue from last and XXXX. time. we direct and operations. an quarter under parties small Solar lower reimbursements to little is brokerage have sales options. projecting on properties due fees compared to direct on the updated reimbursement the third and the items that wind due talked to decreased in views changes There's about tax auction asset updated in to increase higher expenses provided tenant of first to by solar goods Cost earlier. changes of due this potential on operations a that at

general with session. back couple the time On AFFO to the participating. generating to up share the administrative $X.XX you and last that expense count with time. operating February. buybacks. in rate number Weighted lower you side, comments to Legal range with and that XXXX, changes due this at are shares begin property decreases per the and also one item prices wraps lower increasing my result remaining same Q&A for projected and mentioned for weighted MetLife quarter average the first expenses higher decreases the We're forward that share the property all morning. to can we've a expenses in results in changes Operator, XX, pricing of in accounting times, tax saw share slightly X.X% of this projected a no of interest reset interest plus the asset we balance expense in AFFO range. of updated than loan This debt $X.XX, updated sales in curves. now average and X.X% than Thank estimating as for This spending combination lower potential decreases slightly

from [Operator Janney. Instructions] First question today is Stevenson from Rob

Paul how to throughout that $XX a the million they or expected second What Luca, XX year, be ratably the about is under are is for thinking farms we close, that? contract. thing, quarter should that

of the quarter. will in over drift be second some The those into the quarter, bulk third will

then process And those auction on what the farms? other about

quarter. second process, auction and The third

of to, portfolio about the in Are million-ish think sort $XX exposure other you of be that should you've thinking what focused like about and that the about whole. the those when we specialty Midwest dispositions going volatility some tree crops on talked forward your that of crops? or these reducing How looks in terms and are mainly sales? the row the And following

Midwest, crop of auctions our you other we lot the ago, risk. some assets closings, you in mentioned and put of we'll we'll yet question, things which course, up about to then there'll we make but water be Well, be broader are start risk Colorado crop we crops term well have can there's out one may thing those informed as of is transaction, going a not and sold when lot or selling water when you you the in have a happens, it these so the not Nebraska closings United assets some I the -- a or long may but people do times California The on regions see the fact we second of your keep Eastern because that, a to press row maybe. to for haven't three every assets. was we specialty States. has But on two like it as talked of to date been we sales a one But finally week of many in release as the reasons of that row clearly most And closes. doing and consider where

if pay pay wind some is the there wind to about going to debt do how on up going paying that going before priority debt, to proceeds, would Mac and these that, stuff to down mean, just what And James, up other Farmer the think you're you facilities, I segments of you down with you're debt as you of some Rutledge sale if hit do that's down being?

in Farm general, Line be going pay would in we're floating Credit America say, that our Farmer lines, some down the debt highest cost today, I'd to next. Line, Mac first the of Mid

XXXX, have any year balance, We repay reset repay XX% we've lines. XX% calendar to Those also that repayments our can make we can any in in and about one calendar the about on year. one ability the MetLife in we

a percentage higher of a allows good of loans the of thumb. but that's sort One rule

So use we could terms sort of on we side. after that go amount on of of to have -- proceeds good in a that that

one terms in last Any Saberpoint And the litigation? me. update for with timing of events and/or

I there's to report, anything and don't on waiting. think we're appeal

So in the no activity news, no several last real months.

from Golladay next is from Wes The question Baird.

talk there a scaling to a so? buying much is at how how you you Can business balance versus or discount, about the stock the limit

Yes, stock But the it's the balance. look at the for I to mean, is our cheapest and today our investors. in on obviously, I way planet a we're is money make this farmland it

if And dollar is I shouldn't -- business there -- stock so inexpensively out can we? $X.XX worth by is why can our miles. it, that's call a discount buy cheapest I -- on And and the and farmland of numbers, less kind farms than XX% for, they're the buying farmland our

doing. what we're that's So really

I trying of discount and mean, As to trading think in as opinion your said, business. we go we're buyback And to But discount. we're reasons. far for at trading at we team question, proud this the we in founded business. aggressively particular, stock business, frankly me, not here it's Luca our this steep two as built and too our a not out it's

second that to is is incredibly value farmland and environments of first The accept investing. and the the farmland general the driver an market unwilling appreciation appears big market is

that is this out clear is demonstrating that to putting is mouth that point. We're appreciation it's be there. in deeply our and signal our there loud trying And we're that so money undervalued stock that our phone frank call real and to we're and where on

was rates you to bit -- they some but where flows than normal, lower the trough maybe that lose at sell, cap low either are the business farms? And the going maybe then to even cash under cap because a just at already of little looking when assets maybe you're for not we're traded pressure of look rates

what we cap and I said will the by in long is Obviously, mean it lowest are when the it's that term, relatively where than are depreciation rent we portfolio are portfolio. an highest in recognize. opportunity, on other opportunity piece lower on our -- think Illinois farms. cap return assets assets everybody it's obviously, own. Well, in we Corn both often increased the places list. which type is But and less assets of that's for important rate I focus increased in that farms, Belt to total of this In the They core the the rate general, farms the

-- gone the You XX% up of mean, that of last the combine have in those appreciation years. couple I region country, assets

cap just and just be its Speakers] blunt, rates chase And properties, we rate make. rate. cap -- cap it class drives the there'll the not [Multiple we to the Speakers] that's than just lowest higher. or cap I drives But -- rates the point to I want asset what asset it's lowest not assets, highest And rate in so thing, of But lot think, to be there'll chase [Multiple that's what how it's the works. are quality you're lower cap mean our properties. this rate cap total on want return best with right, class the properties problem don't the quality more the just is thing Because be

that grasp sitting or at call it. values that's and market valuing we're thing a Public it happening. the much selling well. frustrated that it every us overheads it's just really other that. being about being a of the as X it, it, reasons something is this, although, different as is -- and that about instead what's the So a X.X what's at is the of all of asset, farm something an our that. and a happening frustrated cap important for opportunity company of gap but we're crux market is sensible I public to like is mean and there's here hands on some But about the we're too and taking just doing But way some wide we're

And it'd could can of impacts do -- weather a it drought, be California, related maybe be any give some your just do beneficiary crops to your on that? view can if you a on actually then maybe year, or your this farmers havy service well, do in us crops view you just any expect whether can your how and well, snowpack

am not on I predict this weather the going the So to phone following. call, except say to

the The don't popular and some. weather. degree, great last than be safe First, feel there certain few with Panhandle, that events is are Kansas, of in event, hyperbole reservoirs is drinking Belt, will on said, should Texas, years let's localized press. some is a quite in start greener, a the yard in State you our snow But all California. Western a to and disaster the is really -- parts And the that ton California of drought few incredible all I here snowfall the natural been way, the is There sympathy that's headline think ton there's full that front Eastern Colorado, year months drought continues because to good by been a your to have general flood, received going in be about. mean, all the Western rain been that's of A will bad agriculture, somebody there's we press good more California for every amount of more things, The in rain and good. news, a on last flooding they've in like thing. localized for the rain years. water pretty people, for ridiculous. the a more is Grain the people California not This a of thing But we're highly the than we negative I the Then giving to farms. sidetracked get in

are La some El think. of in And to Nino a -- gradual on regions. cash planning pretty forth, we Nina to so shifts hopefully off obviously, global so in going and country be make row going mostly start the rent weather to and the The that's we're is and improvements so real the good rest to

not we our any weather we're So to year, in of farmers by given -- want any affected course. directly by but succeed

year it's So to we pretty, the setting be from perspective. good weather up regions across a think pretty a

predict did wouldn’t. where said I though even the I I weather So

The is Securities. B. Craig from next Kucera from question Riley

quarter, the you flattened rent I on about the that the of the lagging last over you sort cash food talk but I your rent [XX%] course. here on can of indicator, for leases first achieved of But the know your Paul, a growth the row fixed is rents think year? expectations growth in year, out in crops remainder rolled maybe and in quarter the CPI

Remember lease our rent rolls, our rent duration years. is three about

at of at least renewed years two the beginning XXXX. starting looking last rent now at are that we ago for So leases

appreciation lot So increases a lot values. there a yield been in There has that been quite happen has of the in farmland meantime. of

but still at strong lease started we're expecting a relatively rent beginning now are to the cycle, we full because looking this at XXXX. of kind of in we be So haven't renewal again, really starting depth, lease

right couple XX XX, rent think a we XX% I bracket, to under them still as right there'll increases maybe we're kind leases rent And -- know to maybe Luca now, relatively bracket, years out. now, quite you we're a don't tough so renegotiating be Craig. referred add as the just the negotiated to, strong is still three ago. closed of the on of year the stuff big me get got the round XX% were things I increases. economy Let sort the that cycle as they in -- strong we'll numbers something We've increases in got year And just get of two of didn't if XX row that the alluded farm reason that. some in in now years vintage of we crop XX ago, that for

the pretty actually year increases. we ones negotiated strong later in of that had some And

basis than average on the we last kind of we're higher couple years. the an of have on So been for working base

So I not we may level still but increases the to we’ll last quite had be get year. strong think

you're that understanding And still process in here. early kind the of

things they in at looking a you shift relatively your maybe expecting discuss rents to or you be As things any rising are tenants, with maybe of are participating constant? amount

structure lease more regional the kind a mean, I kind of of really of agreements basis. is crop No,

and any different So profitability farm structures. the drive just in different wouldn't environments really changes

second higher the the marketplace easier flex risk for And to simplicity long on the the a adjusted make to just and cash efforts a rents back we and rent the two we our other stability overwhelmingly our And want cash words, enough the thing some on upside operation that on the think standpoint over from using managing you're team of we efficient row that the Number is returns what of a In term, than the business are cash model. manage. and stay model don't the and are you we downside. given way get But side to office rent to are do sort is way. more for that of up side, on crop in model using accounting reasons. one

rent cash a So we drive model…

James think has I that something too…

QX. after kind QX rent business, to or add, would end of just getting I’d that in XXX% definition the if before planting, rents be so and paid the XX% are cash kind on Whereas harvest, of by participating that we of Yes, our variable back rent generally timeframe. you're

derisked year. cash of feature a portion a very derisking early very rents perspective, nice our it's flow on meaningful from very, the perspective, be to a in So

for Just one more me.

that is As that and the something million going is roughly parties, is included to going if MWA? to go third of $XX you through is in this guidance of assets, run MWA or auction process it is handle that through that

doing we're so answer number the one, a in me let sense. whenever more So broad -- question

for here these people We have incurring are many obviously like the not know very be and in based We partners in assets. expenses everybody relationships brokerage the these potential with market. occurring of will many But of kind sales where some. transactions in there the on that assets are services the buyers of Farmland

it's are partnering with they're market the in of us Nebraska on with terms involved. asset for Specifically licensing some experience of about kind state we've past asset how auctions, and but on in the they worked people the given MWAs a and MWA dependent, all Colorado the is the it's sales really sales of depth in that then handling

I'm as consolidated, that… that -- going sure I it's the all let of mean, to question guidance to answer kind not far James over turn goes, I'm -- I’ll As what so

side. looks think it sure and in through to Craig, we complying a our But Actually, guidance the sort in would basis, that of you that we've update that we're throughout truly really numbers of be would sources, with they be their those any rules. go we're party would arm's rent pipeline fees cash as out. are revenue as on of so those kind we'll other necessary external revenue the making transaction make would as and see pay on projections sure for the flow about that how colleagues length the we Yes, considering are far year the consolidated receive third kind continue all internal got of and to to type

have appears further It we questions. Instructions] [Operator no

back the hand team management I'll to So to conclude.

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

call. This concludes today's

of may the now day. lines, disconnect your and You Thank enjoy rest your you.