Gladstone Land (NASDAQ:LAND) management highlighted a year marked by portfolio reshaping, leasing changes for certain permanent crops, and a focus on liquidity and balance sheet flexibility during its year-end and fourth-quarter earnings call. Executives discussed six farm sales completed during the year, ongoing efforts to resolve vacancies, and how modified lease structures and direct farming operations are affecting the timing of revenue and cash flow.
Portfolio sales and capital redeployment priorities
CEO David Gladstone said the company sold six properties during the year for total proceeds of $95 million and recognized an aggregate gain of about $21 million. Two of those sales occurred in the fourth quarter.
After these transactions, Gladstone said the company still owned nearly 99,000 acres across 144 farms. He also emphasized the company’s California water assets, citing approximately 56,000 acre-feet of water stored in aquifers and noting that California water conditions are currently favorable.
Looking ahead, Gladstone said the company is evaluating additional potential farm sales and has been in discussions with buyers that could result in transactions over the next few quarters. If additional sales are completed, management said it would like to use most of the proceeds to pay down debt and buy back “more expensive” preferred stock, which it said could also trigger a gain.
Acquisitions on hold amid elevated cost of capital
On acquisitions, Gladstone said financing costs have been “slowly moving closer” to levels the company prefers, but the company is not yet ready to reaccelerate purchases. He said interest rates and overall cost of capital remain elevated and that cap rates on most row-crop farmland are “still too low” to make acquisitions economical if the company must rely heavily on debt.
Management said it is maintaining a disciplined approach to new investments but remains prepared to act if a compelling acquisition opportunity arises. Gladstone added that demand for prime farmland producing berries and vegetables remains stable in much of the company’s footprint, especially along coastal regions, and that the company has begun seeing “some signs of improvements” in pricing and broader economics around those crops.
Leasing strategy: modified structures and direct operations
Management again emphasized its shift on certain farms—particularly those tied to challenged permanent-crop markets such as nuts and wine grapes—toward lease structures with reduced fixed rents and greater crop-share participation. Gladstone said that on a handful of properties the company reduced fixed rent obligations for growers and instead took a larger percentage of gross crop sales.
In addition, the company has been directly operating two properties with help from third-party operators. Gladstone said the company views crop insurance as an important risk mitigant under these arrangements because coverage is largely based on historical yields.
During the quarter, the company executed five lease renewals. Management said:
- Two row-crop renewals produced a modest increase of about 7%.
- Three permanent-crop renewals reduced fixed base rent in exchange for an additional crop-share component, which management expects to be roughly flat versus prior leases on those farms.
The company said five leases are scheduled to expire over the next six months, representing about 3.6% of total 2025 lease revenue, and management said it is in discussions with existing and prospective tenants.
Gladstone also provided an update on vacancies and other tenant-related issues, stating the company had nine farms that were wholly or partially vacant, with some being farmed. Four of the farms are being directly operated under management agreements with unrelated third-party growers. The company also recognizes revenue on a cash basis for leases with three tenants collectively leasing about five farms.
In the Q&A, CFO Lewis Parrish estimated the total value of the nine vacant farms at “maybe $50 million” as a ballpark figure, while emphasizing that the three largest vacant farms—almond properties—were close to being returned to income-producing status, potentially within the first half of the calendar year. Management said those farms became vacant in part because trees needed to be removed and the scale of the properties made the cleanup process time-consuming.
Crop and water market commentary
Farm operations head Bill Reiman said management’s focus has been on properties under modified lease agreements or being farmed directly with third-party operators. He said the company completed the 2025 harvest and exceeded overall yield objectives in its budgets. He also said the company is renewing modified lease arrangements on five of the eight farms in that group; two of the remaining three are redevelopment projects, and the Napa wine grape vineyard has been leased to a local grower.
Reiman provided several market observations:
- Nut crop markets, particularly pistachios, were described as resilient, with a “light” supply chain providing upward pressure on pricing.
- Management said its base guarantee price for the current crop remains consistent with 2024, and it believes the final price for the 2025 crop could be higher than final 2024 pricing.
- One processor announced an extra $0.50 per pound bonus to be paid with an April crop payment for pistachios, which management characterized as supportive of pricing momentum.
- Almond prices dipped in January but rebounded, and management cited strong demand and an “underbought” market as supportive factors.
- Wine grape markets were said to be underperforming, though Reiman noted early signs of tighter supply in some white varietals and pointed to ongoing vineyard removals as a potential path back toward market balance.
On water, Reiman said reservoirs and snowpack were above historical averages and expressed optimism for strong surface water allocations for 2026. Management also discussed water purchasing as a cost-driven strategy, noting that plentiful supply can lower prices and create opportunities to acquire water for future use.
Financial results, financing activity, and liquidity
Parrish said the company recorded net income of about $4.2 million for the fourth quarter and a net loss to common shareholders of $1.8 million, or $0.05 per share. For the year, net income was $13.5 million and net loss to common shareholders was $10.5 million, or $0.29 per share.
Adjusted FFO (AFFO) for the fourth quarter was $14.4 million, or $0.38 per share, compared to $3.4 million, or $0.09 per share, in the same quarter last year. For the year, AFFO was $14.4 million, or $0.39 per share, compared to $16 million, or $0.47 per share, last year. Parrish attributed the year-over-year decline in AFFO primarily to lease structure changes, timing differences in revenue recognition tied to crop sales on directly operated farms, lost revenue from farm sales, and tenancy issues that increased vacancies and costs.
Parrish said fixed base cash rents decreased by about $1.9 million in the quarter and by about $19.8 million for the full year, driven by lease modifications that reduced or eliminated fixed rents and, in some cases, included cash incentives to tenants in exchange for higher participation components. Participation rents increased by about $9.3 million in the quarter and by $10.6 million for the full year, which management said was driven further by stronger pistachio pricing.
He also discussed direct-farm results and timing: net profit from crop sales on direct-operated farms was about $2.6 million for the 2025 harvest, but management said the full impact is not reflected yet because growing costs were expensed while a significant portion of revenue—particularly pistachio-related—will be recognized later.
On financing, Parrish said the company repaid a $4 million note during the quarter that was secured by a property sold in the period. After year-end, the company redeemed its Series D term preferred stock to avoid a coupon step-up from 5% to 8%, funding the redemption through a combination of common stock issued under its at-the-market (ATM) program and a draw on its line of credit.
Since the beginning of the fourth quarter, management said it raised about $50 million of common stock through the ATM program, with most proceeds used to redeem debt. In the Q&A, Parrish said about $10 million was outstanding on the line of credit at a 5.69% variable rate.
Parrish said the company had about $85 million in immediately available capital and more than $185 million of unpledged properties that could be used as collateral. He added that about 98% of borrowings are fixed-rate, with a weighted average interest rate of 3.39% locked in for another 2.7 years.
Looking ahead, management said it has about $17 million of scheduled principal amortization payments due over the next 12 months and no loans maturing over that period, but about $160 million of loans with fixed-rate terms are scheduled to reset over the next 12 months. That includes $135 million under the MetLife facility scheduled to reprice in January 2027.
The company also declared a monthly dividend of $0.0467 per share for the first quarter of 2026, which Parrish said represented a 4.9% annualized yield at a referenced stock price of $11.51.
About Gladstone Land (NASDAQ:LAND)
Gladstone Land Corporation (NASDAQ: LAND) is a publicly traded real estate investment trust (REIT) that specializes in the acquisition and ownership of farmland in the United States. Established in 2013 and headquartered in Wayne, Pennsylvania, the company focuses on purchasing high-quality agricultural properties and leasing them to farmers under long‐term, triple‐net lease agreements. This model provides tenants with operational flexibility while generating stable, recurring rental income for investors.
The company’s portfolio spans several key agricultural regions across the country, including California, the Midwest, and parts of the Southeast.
