Good day, everyone, and thank you for joining this Farmland Partners Inc. Q3 2025 Earnings Call. My name is Jim, and I'll be your operator for today's session. Also a reminder, today's session is being recorded. It is now my pleasure to turn the floor over to our host, President and CEO, Mr. Luca Fabbri. Please go ahead, sir.

Thank you, Jim. Good morning, and welcome to Farmland Partners third quarter 2025 earnings conference call and webcast. We truly appreciate you taking the time to join us for this call because we see it as a very important opportunity to share with you our thinking, our strategy in a format less formal and more interactive than public filings and press releases. I will now turn over the call to our General Counsel, Christine Garrison, for some customary preliminary remarks. Christine?

Thank you, Luca, and thank you to everyone on the call. The press release announcing our third quarter earnings was distributed after the market closed yesterday. The supplemental package has been posted to the Investor Relations section of our website under the sub-header Events and Presentations. For those who listen to the recording of this presentation, we remind you that the remarks made herein are as of today, October 30, 2025, and will not be updated subsequent to this call. During this call, we will make forward-looking statements, including statements related to the future performance of our portfolio, our identified and potential acquisitions and dispositions, the impact of acquisitions, dispositions and financing activities, business development opportunities as well as comments on our outlook for our business fronts and the broader agricultural markets. We will also discuss certain non-GAAP financial measures, including net operating income, FFO, adjusted FFO, EBITDAre and adjusted EBITDAre. Definitions of these non-GAAP measures as well as reconciliations to the most comparable GAAP measures are included in the company's press release announcing third quarter 2025 earnings, which is available on our website, farmlandpartners.com, and is furnished as an exhibit to our current report on Form 8-K dated October 29, 2025. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations, and we advise listeners to review the risk factors discussed in our press release distributed yesterday and in documents we have filed with or furnished to the SEC. I would now like to turn the call to our Executive Chairman, Paul Pittman. Paul?

Thank you, Christine. Good morning, everyone. This is, again, a very strong quarter for us from the standpoint of AFFO performance. I'll let the rest of the team make some more specific comments about that. I want to make a couple of comments, though. As you all read overnight, there appears to be some sort of a China trade deal involving agricultural commodities. I think that will obviously be beneficial for American farmers. It's a little unclear; it looks like maybe a one-year deal and quite a bit of soybean sales. I tried to find this morning in the news more detail; there doesn't seem to be much. My sense is if you look back to the last time the Chinese were really aggressive in terms of soybean buying, which was, I think, the 2021 year, this will be a material bump in the exports of soybeans from the U.S. to China over the next few months. I don't think it's sort of earth-shattering in terms of positive for farmers. It's certainly good news. But since it's only a one-year deal, it's hard to see whether it will have a real impact on long-term rents or land values. Land values continue to go up despite the fact it's been a somewhat tough farm economy for operating farmers this year. The other comment I would like to make about this year's AFFO, while we are thrilled with how strong it is, it is based on some very positive operating events that occurred during the year on some of these farms and also the expansion of our loan program with some opportunistic lending. The caution I want to give everyone is while we're thrilled with this year, it's based on some onetime events. So frankly, I think next year, we'll start out next year with kind of the same place we started this year, which is a sort of more modest AFFO than what we're actually ending up with. We'll do our best to find the onetime events next year that bump that number, but you can't promise them since they are onetime events. With that, I'm going to turn it over to you, Luca, to go through things in more detail.

Thank you, Paul. I will, of course, echo Paul's celebration of a very strong financial performance for the quarter and for the year as well as a little bit of a caution note regarding performance next year, as we always strive to do our best to build on top of a very strong bedrock of operating performance. A couple of things that I wanted to highlight for this quarter is number one, the sale of our brokerage and third-party farm management subsidiary, Murray Wise Associates. I think this is a very good outcome for our shareholders in terms of getting a good price for this subsidiary, for this business as well as simplifying significantly our operations. This is also a very strong outcome for another set of very important stakeholders in the company, which is the employees. I think this sale gives the team at MWA a very strong platform to continue their professional growth, while maintaining our access to their collective knowledge and experience and our relationship with them because we plan to continue using their services in the future. The second transaction I want to highlight is that we exchanged $31 million worth of our Series A preferred units for a set of properties in Illinois that were actually originally part of the transaction that kind of led to the issuance of the Series A preferred. I want to highlight that the properties were sold at a much appreciated value compared to the value of 10 years ago, appreciated by about 56%. This, again, is a very tangible proof of the appreciation potential in this asset class that we continue to prove to the market and to deliver our efforts to deliver that value to our shareholders. In that vein, we are also announcing that we are planning to issue a special dividend for this year, very much in line with what we did two years ago and last year. This year, we are targeting a range of between $0.18 and $0.22 per share to be issued in January 2026 alongside the regular dividend. Again, this is very much in line with our commitment to deliver value to our shareholders. And with that, I will turn over the call to our CFO, Susan Landi, for her overview of the company's financial performance. Susan?

Thank you, Luca. I'm going to cover a few items today, which include a summary of the 3 and 9 months ended September 30, 2025, a review of our capital structure, a comparison of year-to-date revenue and updated guidance for 2025. I'll be referring to the supplemental package, which is available in the Investor Relations section of our website under the subheader Events and Presentations. First, I will share a few financial metrics that appear on Page 2. For the 3 months ended September 30, 2025, net income was $0.5 million or $0 per share available to common shareholders, which was lower than the same period for 2024, largely due to the recognition of deferred gains from 2023 property dispositions of $2 million versus the current period dispositions resulting in a loss of $0.5 million. Note that the decrease in disposal gains is partially offset by interest savings associated with our lower average debt balance. AFFO was $2.9 million or $0.07 per weighted average share, which was higher than the same period for 2024. AFFO was positively impacted by significantly lower interest expense as a result of debt reductions, lower property operating costs and increased interest income due to a higher average balance on loans under the FPI loan program. For the 9 months ended September 30, 2025, net income was $10.4 million or $0.18 per share available to common shareholders, which was higher than the same period for 2024, largely due to net gains on dispositions of 35 properties that occurred in the current year, significant debt reductions resulting in interest savings, as well as increased interest income due to the higher balance on loans under the FPI loan program. AFFO was $6.5 million or $0.14 per weighted average share, which was higher than the same period for 2024. AFFO was positively impacted by lower property taxes, lower general and administrative expenses and lower interest expense as a result of significant debt reductions. Next, we'll review some of the operating expenses and other items shown on Page 5. Gain on disposition of assets was higher during the 9 months ended September 30, 2025 than the same period in 2024, due to the dispositions of 35 properties in 2025 with aggregate consideration of $85.5 million, which resulted in a net gain on sale of $24.5 million compared to a gain of $1.9 million in 2024. The net loss on disposition of assets during the 3 months ended September 30, 2025 was due to the sale of a West Coast property. As a result of significant reductions in debt that have occurred since October of 2024, interest expense decreased $3.2 million for the 3 months ended September 30, 2025, and $8.4 million for the 9 months ended September 30, 2025. In addition, the dispositions resulted in lower property operating expenses and depreciation expense. General and administrative expenses decreased $0.4 million for the 3 months ended September 30, 2025, primarily due to the accelerated stock compensation that was recognized during the prior year period. General and administrative expenses decreased $1.7 million for the 9 months ended September 30, 2025, compared to the same period in the prior year due to a onetime severance expense of $1.4 million plus the accelerated stock-based compensation that was recorded in the prior year. Next, moving on to Page 12. There are a few capital structure items to point out. Having repaid our lines of credit in full with repayments totaling $23 million in July, we had full undrawn capacity on the lines of credit of approximately $159 million at the end of Q3 2025. We have no debt subject to interest rate resets in 2025 and as a result of our swap, no exposure to variable interest rates. Page 14 breaks down different revenue categories with comments at the bottom to describe the differences between periods. A few points that I'd like to highlight include fixed farm rent decreased as expected because of the dispositions in Q4 of 2024 and thus far in 2025. Solar, wind, and recreation increased primarily due to proceeds from a solar revenue sharing arrangement with the tenant in the first quarter of 2025, but that was also partially offset by dispositions. Management fees and interest income increased primarily due to the increase in loan issuances under the FPI loan program. And finally, direct ops, which is a combination of crop sales, crop insurance, and cost of goods sold. Crop sales did increase as a result of higher prices and yield on citrus and avocados as well as sales occurring earlier in 2025 than in 2024, while the cost of goods sold increased due to higher maintenance costs. This increase in cost of goods sold was partially offset by lower impairment on inventory. Page 15 has our updated outlook for 2025. You can find the assumptions listed at the bottom of the page. On the revenue side, changes from the July guidance include an increase in management fees and interest income as a result of the higher loan balance under the FPI loan program. Increases in variable payments, crop sales, and crop insurance as a result of updated outlook on properties with variable rent and properties that we directly operate. The decrease in other items is primarily due to less auction and brokerage revenues as a result of the upcoming sale of Murray Wise & Associates. On the expense side, changes from the July guidance include an increase in impairment related to the current period, impairment expense for certain properties on the West Coast as a result of updated market information, and this was primarily offset by a decrease in property operating and depreciation expenses related to property dispositions. The forecasted range of AFFO is $14.5 million to $16.6 million or $0.32 to $0.36 per share, which is an increase from the prior quarter on both the high and low end of the range. This summarizes where we stand today. We will keep you updated as we progress through the year. This wraps up our comments this morning. Thank you all for participating. Operator, you can now begin the Q&A session.

We'll hear first from Rob Stevenson at Janney Montgomery Scott.

When does the '23 farm sale and the retirement of the preferred units close? Is that sometime sooner rather than later in the fourth quarter? Does that extend into early first quarter? How should we be thinking about timing there?

Luca, why don't you handle that question, and I'll comment as necessary. Christine, I think you have the date.

That transaction will close December 10.

Yes. An important additional point is that in our negotiation, we reached an agreement with the other party involved that we will not be responsible for paying the dividends on that preferred starting from what I believe was August 1 or possibly September 1, but we secured a little...

That's great. And then any additional sales that you guys are expecting to complete in the fourth quarter? Are you basically done with sales for this year with this 23 Farm disposition?

The 23 Farm disposition fortunately did not count as one of our seven transactions under the tax law because we are limited to seven transactions a year in most cases. It didn't count due to the nature of it being an exchange. So far, we have completed about five or six transactions, and we have a few smaller ones in progress. We hope to complete something else before the end of the year, but it is unlikely to be as significant as the 23 Farm deal. If anything else happens, it will likely be in the single-digit million range.

And would that, at this point, given that it's small, still be within the special dividend range that you provided?

Yes, we're likely to stick with that range at this point without regard to what happens with one additional acquisition. I mean there is discussion on that.

And then what are you guys planning on doing with the MetLife Term Loan that matures in March?

Luca, do you want to handle that?

Yes. We are planning to renew it probably with MetLife themselves or with one of our other lenders.

And where does pricing today look for you guys relative to the 555 that is currently costing you?

We're currently seeing some movement in interest rates, and the renewal isn't expected for another couple of months at least. We anticipate that spreads will remain fundamentally consistent.

Okay. That's helpful. And then you guys raised the guidance, but I think in the commentary, talked about the guidance decrease for the other items from the sale of Murray Wise. Is that running at somewhere close to $1 million a quarter? How should we be thinking about how we should be looking at that on a quarterly run rate going forward as we adjust our models removing Murray Wise from the expense and revenue lines?

Luca, please handle that, and it may be more detailed than you can do on this call, and we could follow up later. But...

Yes, I'm looking at Susan. She is pulling up some numbers.

Yes. The revenues tend to fluctuate, so there's no straightforward answer. This is typical in auction and brokerage, so consistency isn't expected. It's usually more active in the fourth and first quarters. I don’t believe that the removal will significantly affect our overall bottom line. As for more specifics, I’m not sure that I can provide those right now.

Yes. And so let me add to that. In terms of the remainder of this year, it's going to be a little noisy, but truly de minimis given that this transaction is expected to close on November 15. As far as next year is concerned, we were always very cautious in projecting the performance of that business. So with typically revenues only slightly ahead of costs. So overall, the impact of that transaction is going to be, relatively speaking, negligible in the context of the overall P&L in 2026.

Okay. And then last one for me. In the detailed assumptions on the outlook, you guys increased legal and accounting due to increased litigation spend. Is that more stuff off the short and distort stuff? Or is that something else that you guys are litigating at this point? How should we be thinking about that?

Yes, we still have some legal expenses related to the short and distort situation, but they are relatively modest compared to the past. We are optimistic that we are getting closer to a favorable outcome in that regard. Additionally, we are involved in an ongoing legal dispute in Louisiana concerning one of the farms. While the costs associated with local counsel are not very high, they are expenses we did not budget for as we are spending to defend that situation. This represents a small increase, but it was an unexpected negative surprise that we had not planned for.

We'll hear next from Craig Kucera at Lucid Capital Markets.

I wanted to follow up and get a little more color on the Series A transaction. I know they can convert the remaining preferreds into common OP units in the first quarter. In their discussions with them, have they indicated they're looking to convert? I mean, I'm just trying to figure out from a share count and preferred dividends perspective from a model perspective next year.

It's not that they have the right to convert. It's that we have the right to pay them off or convert them. I would say there is a 99% probability that we will just pay it off and it will not get converted, as I believe the stock price that would trigger conversion is below intrinsic value. Regarding the transaction, this is an individual who has been very successful in agriculture and other industries. We purchased these farms from him around 10 years ago, and we have maintained a strong relationship since then. He was once a significant common shareholder and has owned preferred shares, and he has been a reliable long-term partner. For his family wealth planning, he wanted to buy back the farms closest to his traditional family home. Now, a decade later, he feels he can afford to reclaim them and pass them to his children. That’s where the $31 million of farms comes from. As Luca mentioned earlier, it was a great transaction for us, with an appreciation of about 5% to 6% per year during the hold period. Additionally, a lot of that transaction was financed with a 3% coupon preferred, which we are now trading him back for those farms. Overall, this transaction represents a significant advantage for shareholder value.

As a follow-up, Craig, we have anticipated the expiration of the Series A preferred for quite some time. We are well-prepared with access to our lines of credit to pay off the Series A preferred in cash. This will impact the P&L for a while since we are transitioning from a 3% preferred to a borrowing rate in the mid-5s, but we are ready to manage that.

Okay. I appreciate that color. That's helpful. Changing gears. There was a mention there, obviously, crop sales were significantly better than we were looking for. And then the footnote it references the sale of a walnut property, which accelerated some recognition of revenue and expenses. Can you give us some color on how much that impacted crop sales revenue and the cost of goods this quarter?

Susan, do you want to handle that one?

Yes. Bear with me for a minute while I pull the figures.

While she's pulling the figures, I'll make a general comment. Basically, when you sell off a farm like that, that has inventory on the tree, you do a transaction related to that inventory. And so it gets done more quickly than it would have been if it had actually waited around to pick the walnuts. I mean that's the big picture on the ground reason it was accelerated. Susan, you can make the financial comments as appropriate.

So we recognized about $0.2 million on the sale of the Blue Heron, our property in California, the walnut property.

Okay. So not that material?

It's accelerated – it’s for the accelerated portion.

Yes. Okay. That's helpful. And just one more for me. Looking at the guidance, one of the main increases in revenue was related to management fees and interest income. It doesn't look like you funded any loans on a net basis here in the third quarter. Does that imply you were seeing a pickup in the loan pipeline expected to close in the fourth quarter or maybe something that you thought was going to pay off, didn't pay off? Just some color there would be helpful.

Yes. It's really the second thing that you said. Somebody came to us and said we'd like to continue to extend this loan subject to us having a strong security position and being comfortable with the loan. We're almost always willing to do that because we are a high-cost lender. And as long as we're comfortable with the security position, we're happy to keep making the money. So we extended somebody out, and that led to the move of the projections.

We'll move forward to John Massocca at B. Riley Securities.

Maybe kind of continuing with the line of questions about the loan portfolio. Are you expecting or are there significant kind of maturities upcoming in the loan receivables in 2026?

We have mentioned in previous calls that we are gradually reducing our portfolio. We are taking advantage of the difference between private market value and the public market discount through stock buybacks or special dividends, returning that cash to our shareholders. This process is naturally shrinking our company's revenue line. To counterbalance this, we have been focusing on expanding our loan program since it provides a high current yield. Although it doesn't offer appreciation, it generates a substantial current yield, which we have intentionally pursued. As we reduce the size of our portfolio, we need to cover our overhead costs, and this loan program assists us in doing that. We plan to continue gradually expanding the loan program over time while being mindful not to take on excessive risk. We're comfortable with loans that are backed by solid assets.

Okay. And maybe switching gears a little bit, like bigger picture, what's the exposure in the portfolio either by acreage or rent or however you want to measure it to soybean farms and farmers?

When examining the corn belt, which primarily consists of land in Illinois and some in Missouri, the typical rotation for farms is between corn and soybeans every other year. The simple answer is that about 50% of the land is dedicated to each crop. However, corn tends to be more profitable for farmers, so in reality, it’s likely more around 60% corn versus 40% soybeans in any given year. Many corn and soybean farmers will occasionally plant corn in consecutive years to increase the proportion of corn on their farms, as it generally yields better overall revenue and profitability in most years. Thus, the distribution leans more toward corn rather than being evenly split.

John, I know you're quite familiar with the concept I'll explain. I'm doing this mainly for the benefit of other listeners. All of our row crop leases with farmers growing soybeans are fixed cash rents. Therefore, our exposure to soybeans, particularly regarding trade wars, is very indirect. It doesn't stem from crop shares; rather, it relates to the overall financial health and strength of the farmers, which is supported by crop insurance.

Okay. But as we think about kind of the exposure to any distress in that space or any kind of recovery in that space, it really touches on pretty much everything from a commodity crop basis in your row crop portfolio just because they are potentially rotating that planting in a given year...

Yes, what Luca mentioned is a crucial point. We do not have direct exposure to soybean prices, but we are significantly affected by farmer profitability, of which soybean prices are a part. However, the main story revolves around farmer profitability. If China reenters the market as the world's largest soybean consumer, it will benefit U.S. farmers. That said, it's not as beneficial as one might think. If China buys all its soybeans from Brazil, someone else who used to buy from Brazil will then purchase from the U.S., which lessens the negative effects on our export share. Conversely, if China starts buying U.S. soybeans, it will modestly raise prices, but it won't lead to drastic changes in overall demand. While the dynamics of the market can shift, moving beans around doesn't fundamentally alter the situation. The core message here is about profitability, not solely about soybeans. If soybean farming becomes more profitable, it will influence corn prices as well, as the market adjusts. Higher soybean prices can lead to increased corn prices and vice versa. Overall, global food demand continues to rise, especially for products made from corn and soybeans, despite a shrinking amount of high-quality farmland, much of which we own. This is reflected in the 5% to 6% annual appreciation of those farms. This trend persists because it is linked to long-term farmer profitability, and you can't have the world's breadbasket operating at a negative margin for an extended period. Contrary to some reports, there is currently not a significant number of farmer bankruptcies.

Appreciate all the detail on that. Just one last one. Apologies if maybe I missed it earlier in the call. On the buyback, I understand it's not in the updated guidance, but any more runway for buyback in Q4 and maybe even heading into 2026 just off the back of kind of capital raise and dispositions done earlier in the year?

Luca, I'll let you handle that.

Yes. Our decisions on buybacks are something that we do on an ongoing basis, if you will. We still see the current stock price and the discount to NAV as being a very, very strong proposition for buybacks. It's our own stock, as we unfortunately joke, is the cheapest farmland we can buy. But with the expiration of the Series A preferred and rolling that into the lines of credit, we are increasing our interest expense. So that also comes into the equation. Fundamentally, our buyback activity going forward will be driven as usual by potential additional dispositions and therefore, proceeds from those dispositions. And if we're knocking on wood, I mean we are working to increase our stock price, of course, but if we were to see the stock price dip, we would definitely jump in and probably use our further access to lines of credit to harvest the opportunity.

Yes. I would like to add that a buyback is fundamentally a way to distribute cash to shareholders. We aim to manage this in relation to low and high stock prices. With a special dividend on the way, we expect our stock to trade at a slightly higher level for the next few months, which diminishes the likelihood of buybacks. During this time of year, our preferred method of distributing profits from sales is through a special dividend, while in the rest of the year, we typically utilize buybacks. Given the current situation and the reasons already stated, along with the general perspective that we are unlikely to conduct many buybacks right before the special dividend, I do not anticipate much buyback activity in the next quarter. However, if the stock price were to drop significantly, we would likely enter the market.

Our next question today will come from the line of Tousley Hyde at Raymond James.

Thanks for taking my question. I just got a quick one here. In the past, you mentioned that the long-term average rate increase is somewhere around 3% to 4%. I was just kind of curious, as you pare down the portfolio, how that average might skew going forward, if at all?

It will remain consistent. The nationwide averages are primarily influenced by row crop Midwest, as it represents the largest segment of the farmland economy. The economic impact of California specialty crops is likely somewhat similar, but more variable due to the diversity of crops and their individual cycles. Therefore, as our portfolio increasingly focuses on the Midwest, it will likely align more closely with these averages rather than diverging further.

And do you have any updates you can share on the renewable progress for this year?

Yes, this year the renewals are mostly completed as preparation for next year's crop is already underway. The renewals are essentially behind us or nearing completion. In the row crop region, where we have rollovers, the rents are expected to be relatively flat compared to last year. In previous years, we've seen significant rent increases, but that won't be the case this year. During tough economic times for farmers, we typically negotiate a one-year extension for the new lease instead of committing to a longer three-year lease. This approach allows us to avoid entering into a long-term agreement during a challenging economic negotiation cycle. Additionally, the recent news from China may improve the negotiation process that begins late next summer, making it easier and potentially leading to higher rents.

That was our final question in the queue today. Mr. Fabbri, I'm happy to turn it back to you, sir, for any additional or closing remarks.

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

This does conclude today's Farmland Partners Inc. conference call. We thank you all for your participation, and you may now disconnect your lines.