Gladstone Land Corporation announced that, in light of the recent price volatility of its common stock (largely consistent with the overall market), it is providing the following business update:
Inflation Hedge: With inflation continuing to hover near the highest rates seen in over four decades, farmland continues to act as a strong hedge against inflation. According to the U.S. Bureau of Labor Statistics, CPI grew at an annual rate of 8.3% through August 2022. However, food prices have continued to outpace the rate of inflation, with the overall food segment increasing by 11.4% over that same period, and the food at home segment (which encompasses the majority of the crops grown on Gladstone Land's farms) growing by 13.5%. In addition, according to the NCREIF Farmland Index, which, as of June 30, 2022, consisted of over $14.6 billion of farms across the U.S., the total return on U.S. farmland (including appreciation and income) was 9.7% for the 12 months ended June 30, 2022 (results released quarterly).
Occupancy and Cash Collections: Gladstone Land's farms continue to be 100% leased, and the Company has collected approximately 97.7% of year-to-date base cash rents owed through September 30, 2022. The remaining portion of approximately $1.2 million is currently expected to be collected in full by the end of the year.
Lease Renewals and Upcoming Expirations: Since June 30, 2022, the Company has renewed or extended six leases on certain of its farms located in Arizona, California, and Florida. In aggregate, these renewals are expected to result in an increase in annual net operating income of approximately $281,000, or 9.8%, from that of the prior leases. The Company does not have any more agricultural leases expiring in 2022 and only has one agricultural lease expiring in the first half of 2023, which makes up less than 0.5% of its total annual lease revenues. Management currently expects the renewal of this lease to be flat-to-slightly-higher relative to the current lease.
Current Debt and Increases in Interest Rates: Gladstone Land currently has approximately $642.7 million of total debt outstanding (excluding mandatorily redeemable term preferred stock). Over 99.8% of these borrowings are at fixed rates, and on a weighted-average basis, the interest rate on these borrowings is fixed at just 3.26% for the next 5.1 years. As such, management believes its current debt situation is well-protected against continued interest rate increases, as is currently expected.
Current Liquidity: The Company currently has available liquidity of approximately $172.3 million, consisting of approximately $45.0 million in cash on hand and approximately $127.3 million of availability under our credit facility with MetLife and other undrawn notes or bonds. In addition, Gladstone Land currently has certain properties valued at a total of approximately $104.8 million that are unencumbered and eligible to be pledged as collateral.
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For more information: www.GladstoneLand.com