# Farmland Partners Inc. (FPI) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Farmland Partners Inc.'s 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/1591670/000155837025001214/fpi-20241231x10k.htm
Accession: 0001558370-25-001214
Filing date: 2025-02-20
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/FPI/
All MD&A years: /company/FPI/mda/
Previous year: /company/FPI/mda/fy2023/ (FY 2023)
Next year: /company/FPI/mda/fy2025/ (FY 2025)

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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The following analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes included elsewhere in this Annual Report on Form 10-K.

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Overview and Background

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Our primary strategic objective is to utilize our position as a leading institutional acquirer, owner and manager of high-quality farmland located in agricultural markets throughout North America to deliver strong risk adjusted returns to investors through a combination of cash dividends and asset appreciation. As of December 31, 2024, we owned farms with an aggregate of approximately 93,500 acres in Arkansas, California, Colorado, Illinois, Indiana, Kansas, Louisiana, Missouri, Nebraska, South Carolina, Texas and West Virginia. In addition, as of December 31, 2024, we owned land and buildings for four agriculture equipment dealerships in Ohio leased to Ag Pro under the John Deere brand and served as property manager for approximately 48,300 acres of farmland, including farms in Colorado, Illinois, Indiana, Iowa, Louisiana, Mississippi, Missouri, North Carolina, Ohio and South Carolina. As of December 31, 2024, approximately 60% of our portfolio (by value) was used to grow primary crops, such as corn, soybeans, wheat, rice and cotton, and approximately 40% was used to produce specialty crops, such as almonds, pistachios, citrus, avocados, strawberries, and edible beans. We believe our portfolio gives investors the economic benefit of increasing global food demand in the face of growing scarcity of high-quality farmland and will continue to reflect the approximate allocation of U.S. agricultural output between primary crops and animal protein (whose production relies principally on primary crops as feed), on one hand, and specialty crops, on the other. 

In addition, under the FPI Loan Program, we make loans to third-party farmers (both tenant and non-tenant) and landowners to provide financing for property acquisitions, working capital requirements, operational farming activities, farming infrastructure projects and for other farming, agricultural and other real estate related projects.

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FPI was incorporated in Maryland on September 27, 2013, and is the sole member of the sole general partner of the Operating Partnership, which is a Delaware limited partnership that was formed on September 27, 2013. All of FPI’s assets are held by, and its operations are primarily conducted through, the Operating Partnership and its wholly owned subsidiaries. As of December 31, 2024, FPI owned 97.5% of the Common units and none of the Series A preferred units. See “Note 9—Stockholders’ Equity and Non-controlling Interests” within the notes to the consolidated financial statements included in this Annual Report on Form 10-K for additional information regarding the non-controlling interests.

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FPI has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, commencing with its short taxable year ended December 31, 2014.

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Recent Developments

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2024 Dispositions

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During 2024, we completed dispositions consisting of 54 properties in the Corn Belt, Delta and South, High Plains and Southeast regions. We received $312.0 million in aggregate consideration, and recognized an aggregate gain on sale of $54.1 million, including $2.1 million in connection with properties sold in 2023 for which the gain was deferred.

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2024 Acquisitions

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During 2024, we completed acquisitions consisting of four properties in the Corn Belt and Delta and South regions. Aggregate cash consideration for these acquisitions totaled $17.9 million.

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Share Repurchases

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During the year ended December 31, 2024, we repurchased 2,240,295 shares of our common stock at a weighted average price of $12.25 per share. As of December 31, 2024, we had approximately $55.8 million of capacity remaining under the stock repurchase plan.

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Deleveraging and Maintaining Liquidity Position

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During the year ended December 31, 2024, we reduced our overall indebtedness by $158.5 million, largely with proceeds from the asset dispositions described above, resulting in an increase in liquidity.

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As of December 31, 2024, we had access to liquidity of $245.8 million, consisting of $78.4 million in cash and $167.4 million in undrawn availability under our credit facilities with Federal Agricultural Mortgage Corporation and its wholly owned subsidiary, Farmer Mac Mortgage Securities Corporation (collectively, “Farmer Mac”), Metropolitan Life Insurance Company (“MetLife”), and Rutledge Investment Company (“Rutledge”) compared to cash of $5.5 million and $201.1 million in undrawn availability under our credit facilities as of December 31, 2023. For more information on our deleveraging efforts and liquidity please see “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources”.

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Impact of the War in Ukraine

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Ukraine and the Russian Federation represent large portions of global trade in a variety of agricultural products (e.g., 34% of global wheat exports, according to the International Food Policy Research Institute). The disruption in farming operations in Ukraine, and trade from the Black Sea region has stressed the food supply for many countries that depend on imports of agricultural products from the region, such as Egypt (wheat for food products) and China (corn for livestock).

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The Russian Federation is also a major exporter of fertilizers and trade restrictions have hampered the flow of fertilizers to countries dependent on imports from the Black Sea region. United States farmers, including our tenants, however, generally source fertilizers from the United States and Canada.

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Inflation and Interest Rates

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Most of our farming leases have lease terms of three years for row crops and up to seven years for permanent crops, pursuant to which each tenant is responsible for substantially all of the operating expenses related to the property, including maintenance, water usage and insurance. As a result, we believe that the effect on us of inflationary increases in operating expenses are borne largely by our tenants under the terms of their leases, and inflationary increases in farmer profitability generally lead to increased rents upon lease renewals, as we experienced in the most recent renewal cycle in late 2023. Furthermore, high levels of inflation prompted the Federal Reserve to increase the federal funds rate (the rate the Federal Reserve charges member banks for overnight funds) eleven times between March 2022 and July 2023, which led to a significant increase in market short- and long-term interest rates beginning in early 2022. This increase in rates has significantly increased the cost of our floating rate debt and has also significantly increased the cost of certain of our MetLife debt with interest rates that have been reset since the beginning of 2022. However, we have recently repaid most of our floating rate debt with the proceeds from dispositions. Moreover, the Federal Reserve lowered the federal funds rate in September, November and December 2024. We anticipate any future rate cuts will have a favorable impact on the cost of debt for the Company moving forward. However, interest rates remain high, and the Federal Reserve has most recently signaled that it will not be making rate cuts over the next several quarters.

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Factors That May Influence Future Results of Operations and Farmland Values

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The principal factors affecting our operating results and the value of our farmland include long-term global demand for food relative to the global supply of food; farmland fundamentals and economic conditions in the markets in which we own farmland; and our ability to increase or maintain rental revenues while controlling expenses. We are currently in an environment of appreciating land values, driven by, among other things, inflation, strong commodity prices and an outlook for high levels of farmer profitability. Sustained high interest rates can serve as a counter-balancing external factor to this favorable environment. Each year additional farmland in various portions of the world, including the United States, is repurposed for commercial development, thus decreasing the land acreage available for production of grains, oil seeds, permanent and specialty crops necessary to feed the world’s growing population. Although farmland prices may show a decline from time to time, we believe that any reduction in U.S. farmland values overall is likely to be short-lived as global demand for food and agricultural commodities typically exceeds global supply and quality farmland becomes scarcer.

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Food Demand

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We expect that global demand for food, driven primarily by significant increases in the gross domestic product (“GDP”) per capita and global population, will continue to be the key driver of farmland values. We expect that global demand for most crops will continue to keep pace with global population growth. We also believe that growth in global GDP per capita, particularly in developing nations, will contribute significantly to increasing demand for primary crops. As global GDP per capita increases, the composition of daily caloric intake is expected to shift away from the direct consumption of primary crops toward more fruits, vegetables and animal-based proteins, which is expected to result in increased demand for primary crops as feed for livestock. We believe that once individuals increase consumption of higher quality food, they will strongly resist returning to their former dietary habits, resulting in greater inelasticity in the demand for food. We anticipate these factors will lead to either higher crop prices and/or higher yields and, therefore, higher rental rates on our farmland, as well as sustained growth in farmland values over the long term.

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In addition, global demand for corn and soybeans as inputs in the production of biofuels such as ethanol and soy-based diesel also could impact the prices of corn and soybeans, which, in the long term, could impact our rental revenues and our results of operations. However, we believe that growth in GDP per capita and global population will be more significant drivers of global demand for primary crops over the long term.

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Despite advances in income, according to “The State of Food Security and Nutrition in the World 2024,” a report by the United Nations Food and Agriculture Organization, 2.33 billion people were facing moderate to severe food insecurity in 2023. The ongoing war in Ukraine has disrupted supply chains and affected the prices of grain, fertilizer, and energy, further stressing food supplies for developing countries that are dependent on food imports.

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Farmland Supply

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According to the World Bank Group arable land per capita has decreased by approximately 50% from 1961 to 2021, further exacerbated by international conflicts, such as the ongoing war in Ukraine. Typically, additions to cropland are in areas of marginal productivity, while cropland loss, driven by urban development, tends to affect primarily highly productive areas. According to a study published in 2017 in the Proceedings of the National Academy of Sciences, urban expansion is expected to take place on cropland that is 1.77 times more productive than the global average. The global supply of food is also impacted by the productivity per acre of arable land. Historically, productivity gains (measured by average crop yields) have been driven by advances in seed technology, farm equipment, irrigation techniques, and improvements in soil health, chemical nutrients and pest control. On the other hand, we expect the shortage of water in many irrigated growing regions in the United States and around the globe, often as a result of new water restrictions imposed by laws or regulations, to lead to decreased productivity on those acres.

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Conditions in Our Existing Markets

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Our portfolio is broadly diversified across numerous farmland markets and crop types. Across all regions, farmland acquisitions continue to be dominated by buyers who are existing farm owners and operators, whereas institutional investors constitute a small fraction of the industry (less than 5% of total farmland in the United States). We generally see firm demand for high quality properties across all regions and crop types.

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Farmland values are typically very stable, often showing modest increases even in years of commodity price weakness. We expect this trend to continue, with modest but consistent annual increases that compound into significant appreciation in the long term. Under certain market conditions, as in 2021, 2022 and 2023, with strong commodity prices and farmer profitability, there are periods of accelerating appreciation in farmland values. Leases renegotiated under the robust market conditions experienced in 2021, 2022, and 2023 reflected significant rent increases. While the pace of appreciation and transaction volume slowed in 2023 and 2024, these metrics remain strong relative to long-term trends.

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We believe quality farmland in the United States has a near-zero vacancy rate as a result of the supply and demand fundamentals discussed above. We believe that due to the relatively high fixed costs associated with farming operations (including equipment, labor and knowledge), many farm operators choose to rent additional acres of farmland when it

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becomes available in order to allocate their fixed costs over additional acres. Our view is that rental rates for farmland are a function of farmland operators’ view of the long-term profitability of farmland, and that many farm operators will compete for farmland even during periods of decreased profitability due to the scarcity of farmland available to rent. Furthermore, because it is generally customary in the industry to provide the existing tenant with the opportunity to re-lease the land at the end of each lease term, we believe that many farm operators will rent additional land that becomes available in order to control the ability to farm that land in future periods. As a result, in our experience, many farm operators will aggressively pursue rental opportunities in their operable geographic area, even when the farmer anticipates lower profits returns or even short-term losses.

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Lease Expirations

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Farm leases are generally one to three years in duration. As of December 31, 2024, our portfolio had the following lease expirations as a percentage of approximate acres leased and annual minimum fixed rents:

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Rental Revenues

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Our revenues are primarily generated from renting farmland to operators of farming businesses. Our leases generally have terms ranging from one to three years, with some extending up to 40 years (e.g., renewable energy leases). Although the majority of our leases do not provide the tenant with a contractual right to renew the lease upon its expiration, we believe it is customary to provide the existing tenant with the opportunity to renew the lease, subject to any increase in the rental rate that we may establish. If the tenant elects not to renew the lease at the end of the lease term, the land will be offered to a new tenant. As discussed above, the vacancy rate for quality U.S. farmland is near-zero and there is often competition among prospective tenants for quality farmland; accordingly, we do not believe that re-leasing farmland upon the expiration of existing leases is a significant risk for the Company.

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The leases for the majority of the row-crop properties in our portfolio provide that tenants pay us, typically, 50% of their fixed farm rent in advance of each spring planting season. As a result, we collect a significant portion of total annual rents in the first calendar quarter of each year, which we believe mitigates the tenant credit risk associated with the variability of farming operations that could be adversely impacted by poor crop yields, weather conditions, mismanagement, undercapitalization or other factors affecting our tenants. Tenant credit risk is further mitigated by the farming industry practice of purchasing crop insurance in almost every circumstance because it is required by lenders who provide working capital financing to our tenants and due to requirements in our leases. In certain cases, the Company perfects its security interest in the crop insurance proceeds and the underlying growing crops using practices applicable in the state where the farm is located. Prior to acquiring farmland property, we take into consideration the competitiveness of the local farm-operator tenant environment in order to enhance our ability to quickly replace a tenant that is unwilling to renew a lease or is unable to pay a rent payment when it is due. Many of our leases provide for the reimbursement by the tenant of the property’s real estate taxes that we pay in connection with the farms they rent from us.

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Expenses

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Substantially all of our farm leases are structured in such a way that we are responsible for major maintenance expenses, certain liability and casualty insurance and taxes (which are sometimes reimbursed to us by our tenants), while our tenant is responsible for operating expenses, minor maintenance, water usage and all of the additional input costs related to farming operations on the property, such as seed, fertilizer, labor and fuel. We expect leases for farmland we acquire in the future will contain similar features related to expenses. As the owner of the land, we generally only bear costs related to major capital improvements permanently attached to the property, such as irrigation systems, drainage tile, grain storage facilities, permanent plantings or other physical structures customary for farms. In cases where capital expenditures are necessary, we typically seek to offset, over a period of multiple years, the costs of such capital expenditures by increasing rental rates.

We incur costs associated with running a public company, including, among others, costs associated with our personnel, Board of Directors, compliance, legal and accounting, due diligence and acquisitions (including, among others, travel expenses and consulting fees). Inflation in personnel costs, which is impacting many United States businesses, is also likely to impact our expenses.

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We also incur costs associated with managing farmland assets. The management of our farmland, generally, has significant economies of scale, as farmland generally has minimal physical structures that require routine inspection and maintenance, and our leases, generally, are structured to require the tenant to pay many of the operating expenses associated with the property. We do not expect the expenses associated with managing our portfolio of farmland to increase significantly as the number of farm properties we own increases over time.

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Crop Prices

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While many people assume that short-term crop prices have a great impact on farm values, we believe that long-term farmer profitability and revenue per acre, expressed as crop prices multiplied by crop yield, is a much more significant driver of farm value. Crop yield trends in corn and soybeans have been steadily increasing over the last thirty years. After yields for the 2023/2024 marketing year (September 2023 to August 2024) increased slightly for both corn and soybeans compared to the previous year, the USDA projects that yields will not change significantly for the 2024/2025 marketing year (September 2024 to August 2025). Short-term crop price changes have had little effect historically on farmland values. They also have a limited impact on our rental revenue, as most of our leases provide for fixed farm rents, a common approach in agricultural markets, especially with respect to row crops. Fixed farm rent significantly simplifies the administrative requirements for the landlord and the tenant, as farmers benefit from the fundamental revenue hedging that occurs when large crop yields mitigate the effect of lower crop prices. Similarly, lower crop yields have a tendency to trigger higher crop prices and help increase revenue even when confronted by lower crop yields. Such hedging effect also limits the impact of short-term crop price changes on revenues generated by leases with a variable rent component based on farm revenues. Further risk mitigation is available to tenants, and indirectly to us, via crop insurance and hedging programs implemented by tenants. Our TRS also takes advantage of these risk mitigation programs and strategies with respect to the properties it directly operates.

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Crop prices are affected by many factors that can differ on a yearly basis. Weather conditions and crop diseases can create a significant risk of price volatility. Changes in government regulations and policy, fluctuations in global prosperity, fluctuations in foreign trade and export markets and eruptions of military conflicts, such as the war in Ukraine and the ongoing conflicts in the Middle East, or civil unrest also impact crop prices.

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Interest Rates

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The Federal Reserve engaged in a series of significant increases in the federal funds rate between March 2022 and July 2023. The federal funds rate is the rate the Federal Reserve charges member banks for overnight funds. Changes to the federal funds rate affect all borrowing rates, and for variable rate debt and debt with rates that reset periodically, such changes have a direct and relatively immediate impact. The Federal Reserve lowered the federal funds rate from recent highs in September 2024, which was followed by additional rate cuts in November and December 2024, and has signaled

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the possibility of further rate cuts, but interest rates remain high, and there can be no certainty as to the occurrence, timing or magnitude of future rate cuts by the Federal Reserve.

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As of December 31, 2024, $78.9 million of our outstanding indebtedness was subject to interest rates that reset before maturity (excluding our floating rate debt). There is no debt subject to interest rate resets in 2025.

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At December 31, 2024, $11.8 million, or 5.7%, of our debt had variable interest rates, however, as stated in “Note 10—Hedge Accounting” to the accompanying consolidated financial statements, we have an interest rate swap with Rabobank for $11.8 million, which effectively reduces floating rate exposure to $0.0 million.

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We expect that future changes in interest rates will impact our overall operating performance by, among other things, affecting our borrowing costs and borrowing costs of our tenants. While we may seek to manage our exposure to future changes in rates through interest rate swap agreements or interest rate caps, portions of our overall outstanding debt will likely remain at floating rates or subject to interest rates that reset periodically. In addition, if interest rates begin to rise again, farmland prices may decline if the rise in real interest rates (nominal interest rates minus the inflation rate) is not accompanied by rises in the general levels of inflation. However, our business model anticipates that over time the value of our farmland will increase, as it has in the past, at a rate that is equal to or greater than the rate of inflation, which may in part offset the impact of rising interest rates on the value of our farmland, but there can be no guarantee that this appreciation will occur to the extent that we anticipate or at all.

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International Trade

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After a 37% increase in exports of corn for the 2023/2024 marketing year (September 2023 to August 2024), the USDA estimates corn exports will increase for the 2024/2025 marketing year (September 2024 to August 2025). After a 14% decrease in exports of soybeans for the 2023/2024 marketing year, the USDA estimates soybean exports will increase 8% for the 2024/2025 marketing year, due to less competition from South American production.

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According to the USDA Outlook for Agricultural Trade, the top three export countries from the United States were China, Mexico, and Canada. Exports to China for fiscal year 2024 (October 2023 to September 2024) were $25.7 billion, down 23% from 2023. Exports to Canada were $29.0 billion, up 3% from 2023. Exports to Mexico were $30.0 billion, up 7% from 2023. Exports to China for fiscal year 2025 (October 2024 to September 2025) are forecast to decrease to $23.3 billion. Exports to Mexico are expected to decrease slightly to $29.9 billion, while exports to Canada are expected to increase slightly to $29.2 billion.

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Critical Accounting Policies and Estimates

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The preparation of financial statements in conformity with GAAP requires that management make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts may differ significantly from these estimates and assumptions. We have provided a summary of our significant accounting policies in the notes to the historical consolidated financial statements included elsewhere in this filing. We have set forth below those accounting policies that we believe require material subjective or complex judgments and have the most significant impact on our financial condition and results of operations. We evaluate our estimates, assumptions and judgments on an ongoing basis, based on information that is then available to us, our experience and various matters that we believe are reasonable and appropriate for consideration under the circumstances.

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Real Estate Acquisitions

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When allocating the purchase price of properties acquired using the relative fair value, a number of significant assumptions can be used by management. We may utilize various sources, including third-party appraisals, our own analysis of recently acquired or developed properties and existing comparable properties in our portfolio, other market data and property specific characteristics such as soil types, water availability and the existence of leases acquired with the acquisition. The allocations of purchase price are sensitive and involve a degree of uncertainty due to the nature of the

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inputs and judgements, as well as the number, magnitude and complexity of these inputs and judgements made by management. See “Note 5—Real Estate” for additional discussion regarding acquisitions completed by the Company.

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Impairment of Real Estate Assets

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Assessing impairment can be complex and involves a high degree of subjectivity in determining if impairment indicators are present and in estimating the future undiscounted cash flows or the fair value of an asset. In particular, these estimates are sensitive to significant assumptions, including the estimation of future rental revenues, operating expenses, discount and capitalization rates and our intent and ability to hold the related asset, all of which could be affected by our expectations about future market or economic conditions. Assumptions are primarily subject to property-specific characteristics, especially with respect to our intent and ability to hold the related asset. While these property-specific assumptions can have a significant impact on the undiscounted cash flows or estimated fair value of a particular asset, our evaluation of the reported carrying values of long-lived assets during the current year were not particularly sensitive to external or market assumptions. During the quarter ended September 30, 2023, the Company was under contract to sell an asset for less than its carrying amount, resulting in an impairment of $3.8 million. The estimated fair value of this asset was $3.6 million. The asset was sold during the fourth quarter of 2023. During the quarter ended December 31, 2023, the Company determined that one of its assets had an estimated fair value of $9.8 million, resulting in an impairment of $2.0 million. This is considered a Level 3 measurement under the fair value hierarchy. Level 3 is defined as inputs to the valuation methodology that are unobservable, supported by little or no market activity and are significant to the fair value measurement. The asset was valued based upon a market assessment of similar properties. There was $0.2 million and $5.8 million of impairment recognized on real estate assets in the accompanying financial statements during the years ended December 31, 2024 and 2023, respectively.

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Impairment of Goodwill and Intangible Assets with Indefinite Lives

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Goodwill is not amortized, but rather tested for impairment annually in the fourth quarter and when events or changes in circumstances indicate that the fair value of a reporting unit with goodwill has been reduced below its carrying value. Assessing the fair value of a reporting unit involves a high degree of subjectivity. Significant assumptions include future cash flow, discount rates and future capital requirements. If the fair value of the reporting unit is less than its carrying value, an impairment expense is recognized. Intangible assets with indefinite lives are not amortized, but rather tested for impairment annually in the fourth quarter and when events or changes in circumstances indicate that the fair value of the asset is below its carrying value. Assessing the fair value of the asset involves a high degree of subjectivity regarding the significant assumptions including future cash flow and the discount rate. There have been no goodwill impairments recognized in the accompanying financial statements during the years ended December 31, 2024 and 2023. During the years ended December 31, 2024 and 2023, the Company recorded impairment of $0.6 million and $0.0 million, respectively, on intangible assets. The fair value of trade names was determined to be $1.2 million at December 31, 2024. The Company utilized the relief from royalties method to determine the present value of cash flows and the through 2049 and the present value of residual cash flows, utilizing a discount rate of 8.7% and an average long-term revenue growth rate range of 0-3% per year. This is considered a Level 3 measurement under the fair value hierarchy. Level 3 is defined as inputs to the valuation methodology that are unobservable, supported by little or no market activity and are significant to the fair value measurement.

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Results of Operations

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This section of this Annual Report on Form 10-K generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023. Year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

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Comparison of the year ended December 31, 2024 to the year ended December 31, 2023

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","For the years ended December 31,","\u200b","\u200b","\u200b","\u200b","\u200b"],["($ in thousands)","","2024","","2023","","$ Change","","% Change","\u200b"],["OPERATING REVENUES:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Rental income","\u200b","$","47,119","\u200b","$","49,185","\u200b","$","(2,066)","","(4.2)","%"],["Crop sales","\u200b","\u200b","5,027","\u200b","\u200b","2,257","\u200b","\u200b","2,770","\u200b","122.7","%"],["Other revenue","\u200b","","6,080","\u200b","","6,024","\u200b","","56","","0.9","%"],["Total operating revenues","\u200b","","58,226","\u200b","","57,466","\u200b","","760","","1.3","%"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["OPERATING EXPENSES","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Depreciation, depletion and amortization","\u200b","","5,588","\u200b","","7,499","\u200b","","(1,911)","","(25.5)","%"],["Property operating expenses","\u200b","","7,368","\u200b","","8,660","\u200b","","(1,292)","","(14.9)","%"],["Cost of goods sold","\u200b","\u200b","3,937","\u200b","\u200b","4,754","\u200b","\u200b","(817)","\u200b","(17.2)","%"],["Acquisition and due diligence costs","\u200b","","28","\u200b","","17","\u200b","","11","","64.7","%"],["General and administrative expenses","\u200b","","14,071","\u200b","","11,274","\u200b","","2,797","","24.8","%"],["Legal and accounting","\u200b","","1,654","\u200b","","1,279","\u200b","","375","","29.3","%"],["Impairment of assets","\u200b","","790","\u200b","","5,840","\u200b","","(5,050)","","(86.5)","%"],["Other operating expenses","\u200b","\u200b","103","\u200b","\u200b","144","\u200b","\u200b","(41)","\u200b","(28.5)","%"],["Total operating expenses","\u200b","","33,539","\u200b","","39,467","\u200b","","(5,928)","","(15.0)","%"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["OTHER (INCOME) EXPENSE:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Other (income)","\u200b","\u200b","(123)","\u200b","\u200b","(39)","\u200b","\u200b","(84)","\u200b","215.4","%"],["(Income) from equity method investment","\u200b","\u200b","(125)","\u200b","\u200b","(1)","\u200b","\u200b","(124)","\u200b","NM","\u200b"],["(Gain) on disposition of assets, net","\u200b","\u200b","(54,148)","\u200b","\u200b","(36,133)","\u200b","\u200b","(18,015)","\u200b","49.9","%"],["(Income) from forfeited deposits","\u200b","\u200b","(1,205)","\u200b","\u200b","\u2014","\u200b","\u200b","(1,205)","\u200b","NM","\u200b"],["Interest expense","\u200b","","18,854","\u200b","","22,657","\u200b","","(3,803)","","(16.8)","%"],["Total other (income)","\u200b","","(36,747)","\u200b","","(13,516)","\u200b","","(23,231)","","171.9","%"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Net income before income tax benefit","\u200b","\u200b","61,434","\u200b","\u200b","31,515","\u200b","\u200b","29,919","\u200b","94.9","%"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Income tax benefit","\u200b","\u200b","(16)","\u200b","\u200b","(166)","\u200b","\u200b","150","\u200b","(90.4)","%"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["NET INCOME","\u200b","$","61,450","\u200b","$","31,681","\u200b","$","29,769","","94.0","%"]]
[[/GREPCENT_TABLE]]

NM = Not Meaningful

​

Our net income for the year ended December 31, 2024 was primarily affected by dispositions that occurred in 2023 and 2024, as well as higher crop sales, income from forfeited deposits, lower interest expense and lower cost of goods sold, partially offset by severance expense of $1.4 million and $2.3 million of special bonuses. The severance expense was incurred in connection with the previously announced departure of the Company’s former Chief Financial Officer and Treasurer as part of the Company's cost-cutting initiative.

​

Rental income decreased $2.1 million, or 4.2%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, resulting primarily from dispositions that occurred in 2023 and 2024, partially offset by increased variable rent.

​

Crop sales increased $2.8 million for the year ended December 31, 2024 compared to the year ended December 31, 2023. This increase was the result of a higher volume of walnut, citrus and avocado sales on our directly operated properties.

​

Other revenue remained relatively flat at $6.1 million and $6.0 million for the years ended December 31, 2024 and 2023, respectively.

​

52

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Depreciation, depletion and amortization decreased $1.9 million, or 25.5%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. This decrease was a result of asset dispositions in 2023 and 2024 and more assets becoming fully depreciated, partially offset by depreciable assets being placed into service.

​

Property operating expenses decreased $1.3 million, or 14.9%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, resulting from lower tax and insurance expense primarily due to dispositions that occurred in 2023 and 2024.

​

Cost of goods sold decreased $0.8 million, or 17.2%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. This decrease was the result of a lower impairment expense as well as the sale of blueberry farms that were previously directly operated.

​

Acquisition and due diligence costs were negligible during the year ended December 31, 2024 and remained relatively consistent compared to the year ended December 31, 2023.

​

General and administrative expenses increased $2.8 million, or 24.8%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. This increase was driven by a one-time severance expense of $1.4 million and $2.3 million of special bonuses during the year ended December 31, 2024, partially offset by lower compensation and travel expense. The severance expense was incurred in connection with the previously announced departure of the Company’s former Chief Financial Officer and Treasurer as part of the Company's cost-cutting initiative.

​

Legal and accounting expenses increased $0.4 million, or 29.3%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. Despite this increase, legal and accounting expense continues to be substantially lower than in the past and a very manageable element of the Company’s expense structure.

​

Impairment of assets decreased $5.1 million, or 86.5%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. Impairment during the year ended December 31, 2023, was the result of a property classified as held for sale and written down to its estimated fair value less costs to sell, while impairment during the year ended December 31, 2024 was related to the write-down on the value of trade names associated with Murray Wise Associates, LLC and impairment of irrigation assets held for sale at year-end.

​

Other operating expenses remained flat at $0.1 million for the years ended December 31, 2024 and 2023.

​

Other income remained relatively flat at $0.1 million and $0.0 million for the years ended December 31, 2024 and 2023, respectively.

​

Income from equity method investment increased $0.1 million for the year ended December 31, 2024 compared to the year ended December 31, 2023.

​

Gain on disposition of assets, net increased $18.0 million, or 49.9%, for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to the dispositions of 54 properties in 2024 yielding an aggregate gain on sale of $54.1 million as compared to the dispositions of 74 properties in 2023 resulting in an aggregate gain on sale of $36.1 million. The 2024 dispositions included the sale of a portfolio of 46 properties, comprising 41,554 acres, to Farmland Reserve, Inc., a Utah nonprofit corporation, for total consideration of $289.0 million on October 16, 2024.

​

(Income) from forfeited deposits was $1.2 million for the year ended December 31, 2024 compared to $0.0 million for the year ended December 31, 2023, due to the termination of a repurchase agreement and the retention of $1.2 million in earnest money payments.

​

Interest expense decreased $3.8 million, or 16.8%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. This decrease was the result of lower outstanding debt primarily attributable to debt repayments totaling $239.5 million during the year ended December 31, 2024, partially offset by higher interest rates.

​

53

Table of Contents

Income tax benefit decreased $0.2 million, or 90.4%, for the year ended December 31, 2024 compared to the year ended December 31, 2023. This decrease is due to tax adjustments in 2023 related to estimates.

​

Liquidity and Capital Resources

​

Overview

​

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay any outstanding borrowings, fund and maintain our assets and operations, acquire new properties, make distributions to our stockholders and unitholders, and fund other general business needs.

​

Despite cuts in the federal funds rate by the Federal Reserve in September, November and December 2024, interest rates remain high, and there can be no certainty as to the occurrence, timing or magnitude of future rate cuts by the Federal Reserve. We expect to meet our liquidity needs through cash on hand, undrawn availability under our lines of credit ($167.4 million in availability as of December 31, 2024), operating cash flows, borrowings, proceeds from equity issuances and selective asset dispositions where such dispositions are deemed to be in the best interests of the Company. The Company also has an effective shelf-registration statement that it may use to issue equity or debt securities to raise capital from time to time.

​

Our ability to incur additional debt will depend on a number of factors, including our degree of leverage, the value of our unencumbered assets, compliance with the covenants under our existing debt agreements, borrowing restrictions that may be imposed by lenders and the conditions of debt markets.

​

When material debt repayments are due within the following 12 months, we work with current and new lenders and other potential sources of capital sufficiently in advance of the debt maturity to ensure that all of our obligations are satisfied in a timely manner. We have a history of being able to refinance or extend our debt obligations to manage our debt maturities. Our ability to access the equity capital markets will depend on a number of factors as well, including general market conditions. We have $25.0 million in debt maturities due within the next 12 months.

​

During the year ended December 31, 2024, we repurchased 2,240,295 shares of our common stock at a weighted average price of $12.25 per share. As of December 31, 2024, we had authority to repurchase up to an aggregate of $55.8 million in additional shares of our common stock.

​

Consolidated Indebtedness

​

For further details relating to our consolidated indebtedness refer to “– Recent Developments – Financing Activity” and Note 7 – Mortgage Notes, Line of Credit and Bonds Payable included in the financial statement section of this Annual Report on Form 10-K.

​

Sources and Uses of Cash and Cash Equivalents

​

The following table summarizes our cash flows for the years ended December 31, 2024 and 2023:

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","For the years ended December 31,"],["(in thousands)","","2024","","2023"],["Net cash and cash equivalents provided by operating activities","\u200b","$","16,142","\u200b","$","12,887"],["Net cash and cash equivalents provided by investing activities","\u200b","$","268,754","\u200b","$","158,461"],["Net cash and cash equivalents (used in) financing activities","\u200b","$","(211,944)","\u200b","$","(173,513)"]]
[[/GREPCENT_TABLE]]

​

Comparison of the year ended December 31, 2024 to the year ended December 31, 2023

​

As of December 31, 2024, we had $78.4 million of cash and cash equivalents compared to $5.5 million at December 31, 2023.

54

Table of Contents

​

Cash Flows from Operating Activities

​

Net cash and cash equivalents provided by operating activities increased by $3.3 million primarily as a result of the following:

​

[[GREPCENT_TABLE]]
[["","\u25cf","Receipt of $34.3 million in fixed rent, $10.1 million in variable rent and $5.1 million in tenant reimbursements for the year ended December 31, 2024 as compared to the receipt of $39.8 million in fixed rent, $9.0 million in variable rent, and $2.2 million in tenant reimbursements for the year ended December 31, 2023;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","A change in depreciation, depletion and amortization of $5.6 million for the year ended December 31, 2024 compared to $7.5 million for the year ended December 31, 2023;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","(Gain) loss on disposition of assets, net during the year ended December 31, 2024 of $54.1 million as compared to $36.1 million during the year ended December 31, 2023;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Income from forfeited deposits during the year ended December 31, 2024 of $1.2 million as compared to $0.0 million during the year ended December 31, 2023;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Losses on modification and extinguishment of debt during the year ended December 31, 2024 of $0.9 million as compared to $0.0 million during the year ended December 31, 2023;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","A change in accounts receivable of $2.9 million for the year ended December 31, 2024 compared to $0.9 million for the year ended December 31, 2023;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","A change in accrued interest of $(2.0) million for the year ended December 31, 2024 compared to $0.6 million for the year ended December 31, 2023;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","A change in accrued expenses of $(0.6) million for the year ended December 31, 2024 compared to $(1.5) million for the year ended December 31, 2023; and"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","A change in deferred revenue of $(0.3) million for the year ended December 31, 2024 compared to $0.6 million for the year ended December 31, 2023."]]
[[/GREPCENT_TABLE]]

​

Cash Flows from Investing Activities

​

Net cash and cash equivalents provided by investing activities increased by $110.3 million primarily as a result of the following:

​

[[GREPCENT_TABLE]]
[["","\u25cf","Property acquisitions during the year ended December 31, 2024 of $17.9 million as compared to $22.2 million during the year ended December 31, 2023;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Property dispositions during the year ended December 31, 2024 of $312.0 million as compared to $195.5 million during the year ended December 31, 2023;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","A decrease of $4.3 million in real estate improvements during the year ended December 31, 2024 as compared to the year ended December 31, 2023;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Collections on notes receivable under the FPI Loan Program of $11.8 million during the year ended December 31, 2024 as compared to $2.7 million during the year ended December 31, 2023; and"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Issuances of notes receivable under the FPI Loan Program and financing receivables of $35.8 million during the year ended December 31, 2024 as compared to $11.8 million during the year ended December 31, 2023."]]
[[/GREPCENT_TABLE]]

​

Cash Flows from Financing Activities

​

Net cash and cash equivalents (used in) financing activities increased by $38.4 million primarily as a result of the following:

​

[[GREPCENT_TABLE]]
[["","\u25cf","Borrowings from mortgage notes payable during the year ended December 31, 2024 of $81.0 million as compared to $79.5 million during the year ended December 31, 2023;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Repayments on mortgage notes payable during the year ended December 31, 2024 of $239.5 million as compared to $155.9 million during the year ended December 31, 2023;"]]
[[/GREPCENT_TABLE]]

55

Table of Contents

[[GREPCENT_TABLE]]
[["","\u25cf","Common stock repurchases during the year ended December 31, 2024 of $27.5 million as compared to $72.2 million during the year ended December 31, 2023;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Redemption of Series A preferred units during the year ended December 31, 2024 of $0.0 million as compared to $8.1 million during the year ended December 31, 2023; and"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Dividends on common stock during the year ended December 31, 2024 of $21.6 million as compared to $12.3 million during the year ended December 31, 2023."]]
[[/GREPCENT_TABLE]]

​

Non-GAAP Financial Measures

​

Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”)

​

We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts, or Nareit. Nareit defines FFO as net income (loss) (calculated in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, real estate related depreciation, depletion and amortization (excluding amortization of deferred financing costs), impairment write-downs of depreciated property, and adjustments associated with impairment write-downs for unconsolidated partnerships and joint ventures. FFO is a supplemental non-GAAP financial measure. Management presents FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring our operational performance. Specifically, in excluding real estate related depreciation and amortization and gains and losses from sales of depreciable operating properties, which do not relate to or are not indicative of operating performance, FFO provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. 

However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that result from use or market conditions nor the level of capital expenditures necessary to maintain the operating performance of improvements on our properties, all of which have real economic effects and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. In addition, other equity REITs may not calculate FFO in accordance with the Nareit definition as we do, and, accordingly, our FFO may not be comparable to such other REITs’ FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of our performance. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or service indebtedness. FFO also should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.

We do not, however, believe that FFO is the only measure of our operating performance. Changes in GAAP accounting and reporting rules that were put in effect after the establishment of Nareit’s definition of FFO in 1999 result in the inclusion of a number of items in FFO that do not correlate with the sustainability of our operating performance. Therefore, in addition to FFO, we present AFFO and AFFO per share, fully diluted, both of which are non-GAAP measures. Management considers AFFO a useful supplemental performance metric for investors as it is more indicative of the Company’s operational performance than FFO. AFFO is not intended to represent cash flow or liquidity for the period and is only intended to provide an additional measure of our operating performance. Even AFFO, however, does not properly capture the timing of cash receipts, especially in connection with full-year rent payments under lease agreements entered into in connection with newly acquired farms. Management considers AFFO per share, fully diluted to be a supplemental metric to GAAP earnings per share. AFFO per share, fully diluted provides additional insight into how our operating performance could be allocated to potential shares outstanding at a specific point in time. Management believes that AFFO is a widely recognized measure of the operations of REITs, and presenting AFFO will enable investors to assess our performance in comparison to other REITs. However, other REITs may use different methodologies for calculating AFFO and AFFO per share, fully diluted, and, accordingly, our AFFO and AFFO per share, fully diluted may not always be comparable to AFFO and AFFO per share amounts calculated by other REITs. AFFO and AFFO per share, fully diluted should not be considered as an alternative to net income (loss) or earnings per share (determined in accordance with GAAP) as an indication of financial performance or as a measure of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to make distributions.

56

Table of Contents

AFFO is calculated by adjusting FFO to exclude or include the income and expenses that we believe are not reflective of the sustainability of our ongoing operating performance, as further explained below:

​

[[GREPCENT_TABLE]]
[["","\u25cf","Real estate related acquisition and due diligence costs. Acquisition (including audit fees associated with these acquisitions) and due diligence costs are incurred for investment purposes and, therefore, do not correlate with the ongoing operations of our portfolio. The Company incurred an immaterial amount of acquisition and due diligence costs during the years ended December 31, 2024 and 2023. We believe that excluding these costs from AFFO provides useful supplemental information reflective of the realized economic impact of our current acquisition strategy, which is useful in assessing the sustainability of our operating performance. These exclusions also improve the comparability of our results over each reporting period and of the Company with other real estate operators."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Stock-based compensation and incentive. Stock-based compensation and incentive is a non-cash expense and, therefore, does not correlate with the ongoing operations of our portfolio. We believe that excluding these costs from AFFO improves the comparability of our results over each reporting period and of the Company with other real estate operators."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Deferred impact of interest rate swap terminations. When an interest rate swap is terminated and the related termination fees are rolled into a new swap, the terminated swap's termination fees are amortized over what would have been the remaining life of the terminated swap, while the related contractual and financial obligations extend over the life of the new swap. We believe that, with this adjustment, AFFO better reflects the actual cash cost of the fixed interest rate we are obligated to pay under the new swap agreement, and results in improved comparability of our results across reporting periods."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Distributions on Series A preferred units. Dividends on Series A preferred units, which are convertible into Common units on or after February 10, 2026, have a fixed and certain impact on our cash flow, and therefore are excluded from AFFO. We believe this improves the comparability of the Company with other real estate operators."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Common shares fully diluted. In accordance with GAAP, common shares used to calculate earnings per share are presented on a weighted average basis. Common shares on a fully diluted basis includes shares of common stock, Common units, and unvested shares of restricted stock outstanding at the end of the period on a share equivalent basis, because all shares are participating securities and thus share in the performance of the Company. The conversion of Series A preferred units is excluded from the calculation of common shares fully diluted as they are not participating securities, and therefore do not share in the performance of the Company and their impact on shares outstanding is uncertain."]]
[[/GREPCENT_TABLE]]

​

[[GREPCENT_TABLE]]
[["","\u25cf","Severance expense. During the year ended December 31, 2024, the Company incurred a one-time severance expense of approximately $1.4 million in connection with the previously announced departure of the Company\u2019s former Chief Financial Officer and Treasurer as part of the Company\u2019s cost-cutting initiative. The Company incurred no severance expense during the year ended December 31, 2023. We believe that excluding these costs from AFFO improves the comparability of our results over each reporting period."]]
[[/GREPCENT_TABLE]]

​

​

57

Table of Contents

The following table sets forth a reconciliation of net income (loss) to FFO, AFFO and net income (loss) available to common stockholders per share to AFFO per share, fully diluted, the most directly comparable GAAP equivalents, respectively, for the periods indicated below (unaudited):

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","For the years ended December 31,"],["(in thousands except per share amounts)","","2024","","2023"],["Net income","\u200b","$","61,450","\u200b","$","31,681"],["(Gain) on disposition of assets, net","\u200b","\u200b","(54,148)","\u200b","\u200b","(36,133)"],["Depreciation, depletion and amortization","\u200b","","5,588","\u200b","\u200b","7,499"],["Impairment of assets","\u200b","","790","\u200b","\u200b","5,840"],["FFO (1)","\u200b","$","13,680","\u200b","$","8,887"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Stock-based compensation and incentive","\u200b","","1,963","\u200b","\u200b","2,008"],["Deferred impact of interest rate swap terminations","\u200b","\u200b","\u2014","","","198"],["Real estate related acquisition and due diligence costs","\u200b","\u200b","28","\u200b","\u200b","17"],["Distributions on Preferred units and stock","\u200b","\u200b","(2,970)","\u200b","\u200b","(2,970)"],["Severance expense","\u200b","\u200b","1,373","\u200b","\u200b","\u2014"],["AFFO (1)","\u200b","$","14,074","\u200b","$","8,140"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["AFFO per diluted weighted average share data:","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["AFFO weighted average common shares","\u200b","","49,127","\u200b","","51,810"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Net income available to common stockholders of Farmland Partners Inc.","\u200b","$","1.19","\u200b","$","0.55"],["Income available to redeemable non-controlling interest and non-controlling interest in operating partnership","\u200b","\u200b","0.07","","","0.08"],["Depreciation, depletion and amortization","\u200b","","0.11","\u200b","","0.14"],["Impairment of assets","\u200b","","0.02","\u200b","","0.11"],["Stock-based compensation and incentive","\u200b","","0.04","\u200b","","0.04"],["(Gain) on disposition of assets, net","\u200b","\u200b","(1.10)","\u200b","\u200b","(0.70)"],["Distributions on Preferred units and stock","\u200b","","(0.07)","\u200b","\u200b","(0.06)"],["Severance expense","\u200b","\u200b","0.03","\u200b","\u200b","0.00"],["AFFO per diluted weighted average share (1)","\u200b","$","0.29","\u200b","$","0.16"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","(1)","The year ended December 31, 2024 includes approximately $1.2 million of income from forfeited deposits due to the termination of a repurchase agreement."]]
[[/GREPCENT_TABLE]]

​

The following table sets forth a reconciliation of AFFO share information to basic weighted average common shares outstanding, the most directly comparable GAAP equivalent, for the periods indicated below (unaudited):

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","","\u200b","For the years ended December 31,"],["(in thousands)","","\u200b","2024","","\u200b","2023"],["Basic weighted average shares outstanding","","\u200b","47,546","","","50,243"],["Weighted average OP units on an as-if-converted basis","","\u200b","1,203","","","1,220"],["Weighted average time-based unvested restricted stock","","\u200b","346","","","347"],["Weighted average performance-based unvested restricted stock","\u200b","\u200b","32","","","\u2014"],["AFFO weighted average common shares","","\u200b","49,127","","","51,810"]]
[[/GREPCENT_TABLE]]

​

EBITDAre

​

The Company calculates Earnings Before Interest Taxes Depreciation and Amortization for real estate (“EBITDAre”) in accordance with the standards established by Nareit in its September 2017 White Paper. Nareit defines EBITDAre as net income (calculated in accordance with GAAP) excluding interest expense, income tax, depreciation and amortization, gains or losses on disposition of depreciated property (including gains or losses on change of control), impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to reflect the entity’s pro rata share of EBITDAre of unconsolidated affiliates. EBITDAre is a key financial measure used to evaluate the Company’s operating performance but should not be construed as an alternative to operating income, cash flows from operating activities or net income, in each case as determined in accordance with GAAP. The Company believes that EBITDAre is a useful performance measure commonly reported and will be widely used by analysts and investors in the Company’s industry. However, while EBITDAre is a performance measure widely used across the Company’s industry, the Company does not believe that it correctly captures the

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Company’s business operating performance because it includes non-cash expenses and recurring adjustments that are necessary to better understand the Company’s business operating performance. Therefore, in addition to EBITDAre, management uses Adjusted EBITDAre, a non-GAAP measure.

​

We further adjust EBITDAre for certain additional items such as stock-based compensation and incentive, indirect offering costs, real estate acquisition related audit fees and real estate related acquisition and due diligence costs and severance expense (for a full discussion of these adjustments, see AFFO adjustments discussed above) that we consider necessary to understand our operating performance. We believe that Adjusted EBITDAre provides useful supplemental information to investors regarding our ongoing operating performance that, when considered with net income and EBITDAre, is beneficial to an investor’s understanding of our operating performance.

​

EBITDAre and Adjusted EBITDAre have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

​

[[GREPCENT_TABLE]]
[["","\u25cf","EBITDAre and Adjusted EBITDAre do not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","EBITDAre and Adjusted EBITDAre do not reflect changes in, or cash requirements for, our working capital needs;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","EBITDAre and Adjusted EBITDAre do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDAre and Adjusted EBITDAre do not reflect any cash requirements for these replacements; and"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","\u25cf","Other companies in our industry may calculate EBITDAre and Adjusted EBITDAre differently than we do, limiting the usefulness as a comparative measure."]]
[[/GREPCENT_TABLE]]

​

Because of these limitations, EBITDAre and Adjusted EBITDAre should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results of operations and using EBITDAre and Adjusted EBITDAre only as a supplemental measure of our performance.

​

The following table sets forth a reconciliation of our net income to our EBITDAre and Adjusted EBITDAre for the periods indicated below (unaudited):

​

[[GREPCENT_TABLE]]
[["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["\u200b","\u200b","For the years ended December 31,"],["(in thousands)","","2024","","2023"],["Net income","\u200b","$","61,450","\u200b","$","31,681"],["Interest expense","\u200b","\u200b","18,854","\u200b","","22,657"],["Income tax benefit","\u200b","\u200b","(16)","\u200b","","(166)"],["Depreciation, depletion and amortization","\u200b","\u200b","5,588","\u200b","","7,499"],["Impairment of assets","\u200b","\u200b","790","\u200b","","5,840"],["(Gain) on disposition of assets, net","\u200b","\u200b","(54,148)","\u200b","\u200b","(36,133)"],["EBITDAre (1)","\u200b","$","32,518","\u200b","$","31,378"],["\u200b","\u200b","\u200b","\u200b","\u200b","\u200b","\u200b"],["Stock-based compensation and incentive","\u200b","\u200b","1,963","\u200b","\u200b","2,008"],["Real estate related acquisition and due diligence costs","\u200b","\u200b","28","\u200b","\u200b","17"],["Severance expense","\u200b","\u200b","1,373","\u200b","\u200b","\u2014"],["Adjusted EBITDAre (1)","\u200b","$","35,882","\u200b","$","33,403"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","(1)","The year ended December 31, 2024 includes approximately $1.2 million of income from forfeited deposits due to the termination of a repurchase agreement."]]
[[/GREPCENT_TABLE]]

​

Seasonality

​

We recognize rental revenue from fixed-rate farmland leases on a pro rata basis over the non-cancellable term of the lease in accordance with GAAP. Notwithstanding GAAP accounting requirements to spread rental revenue over the lease term, a significant portion of fixed rent is received in a lump sum before planting season, in the first quarter, and after

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harvest, in the fourth quarter. We receive a significant portion of our variable rental payments in the fourth calendar quarter of each year, following harvest, with only a portion of such payments being recognized ratably through the year in accordance with GAAP, in relation to crop insurance contracts entered into by our tenants. The highly seasonal nature of the agriculture industry causes seasonality in our business to some extent. Our financial performance should be evaluated on an annual basis, which eliminates impacts of seasonality and other similar factors that may cause our quarterly results to vary during the course of the year.

​