• Net Income: $61.5 million or $1.19 per share, higher than the same period for 2023.
• AFFO: $14.1 million or $0.29 per weighted average share, significantly higher than 2023.
• Gain on Disposition of Assets: $54.1 million from the sale of 54 properties in 2024.
• Debt Reduction: Reduced outstanding debt by $158.5 million net of borrowings.
• General and Administrative Expenses: Increased due to a one-time severance expense of $1.4 million and a special bonus of $2.1 million.
• Undrawn Credit Capacity: Approximately $167 million at the end of the year.
• Direct Operations Revenue: Increased due to higher sales of citrus, avocado, and walnuts.
• 2025 AFFO Guidance: $12.1 million to $14.7 million, or $0.25 to $0.30 per share.

• Warning! GuruFocus has detected 9 Warning Signs with FPI.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Farmland Partners Inc (NYSE:FPI) achieved substantial asset sales at high gains, distributing a $1.15 special dividend to shareholders.
• The company reported a significant increase in AFFO, driven by higher rents and strong performance in specialty crops.
• Debt reduction efforts led to lower interest expenses, enhancing financial stability.
• The FPI loan program saw increased activity, contributing positively to revenue.
• Farmland Partners Inc (NYSE:FPI) maintained a strong cash position with undrawn capacity on lines of credit of approximately $167 million.

Negative Points

• General and administrative expenses increased due to a one-time severance expense and special bonuses.
• Fixed farm rent decreased due to property dispositions, impacting revenue.
• The California farmland market remains dislocated, with uncertainties around water availability and regulatory challenges.
• Interest expense remains a concern, with incremental borrowing rates around 6%.
• The company faces challenges in maintaining rent increases, with 2024 seeing a slight decline in renewal rates.

Q & A Highlights

Q: Can you provide insights on the current pricing environment for acquisitions in 2025 and any specific regions or crop types you are focusing on? A: Paul Pittman, Executive Chairman, explained that the portfolio is heavily focused on Illinois, Indiana, Missouri, and California. Illinois remains strong, with stable valuations. They are open to acquisitions in Illinois if valuations are favorable. The Delta region is attractive for its high-quality farms. California poses challenges due to water and regulatory issues, and they are cautious about further investments there.

Q: How is the Ohio John Deere dealership acquisition performing, and are there plans to expand this type of investment? A: Paul Pittman noted that the dealership provides a solid 6-6.5% yield and potential appreciation. While some investors support expanding this type of investment, others prefer focusing on farmland. The company may pursue more such investments selectively but will not aggressively expand in this area.

Q: What is the current incremental borrowing rate, and how would you approach borrowing $20 million? A: Luca Fabbri, CEO, mentioned that they have liquidity available through lines of credit at short-term rates. Susan Landi, CFO, added that the incremental borrowing rate is around 6%. For longer-term borrowing, they would seek more traditional loan agreements.

Q: Are there any concerns about USDA funding freezes affecting your tenants or portfolio? A: Paul Pittman stated that the company avoids tenants who rely heavily on government programs. They focus on tenants with strong economic results independent of government payments. While USDA funding changes could impact the broader market, the direct impact on Farmland Partners is limited.

Q: What are your expectations for rent renewals and how do you see this impacting your financials? A: Paul Pittman highlighted that rent renewals have averaged a 12.4% increase over three years, with 2024 being flat. They expect to push rent increases in 2025, supported by rising grain prices, particularly corn, which should enhance farmer profitability and ease rent negotiations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.