Farmland Partners Inc 8-K, filed Apr 29, 2026
Farmland Partners Inc. (FPI)
About this 8-K
Farmland Partners Inc filed this 8-K on April 29, 2026.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
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Item 2.02.Results of Operations and Financial Condition.
On April 29, 2026, Farmland Partners Inc. (the “Company”) issued a press release announcing its financial position as of March 31, 2026, results of operations for the three months ended March 31, 2026 and other related information. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. The Company intends to make certain supplemental information available on its website www.farmlandpartners.com under the section “Investor Relations—Presentations” prior to the Company’s conference call with investors on Thursday, April 30, 2026 at 11:00 a.m. (Eastern Time).
The information included in this Current Report on Form 8-K, including Exhibit 99.1 hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any filing made by the Company under the Exchange Act or the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01.Financial Statements and Exhibits.
Exhibit | | Description |
99.1* | | |
104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* Furnished herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| | | FARMLAND PARTNERS INC. | | |
| | | | | |
Date: April 29, 2026 | | By: | /s/ Luca Fabbri | | |
| | | Luca Fabbri | | |
| | | President and Chief Executive Officer | | |
Exhibit 99.1
|
Farmland Partners Inc. Reports First Quarter 2026 Results
Completed Redemption of Series A Preferred Units, Eliminating Dilution Risk
DENVER, April 29, 2026 (BUSINESS WIRE) -- Farmland Partners Inc. (NYSE: FPI) (“FPI” or the “Company”) today reported financial results for the quarter ended March 31, 2026.
Selected Highlights
For the quarter ended March 31, 2026, the Company:
| ● | recorded net income of $0.6 million, or $0.01 per share available to common stockholders, compared to $2.1 million, or $0.03 per share available to common stockholders for the same period in 2025; |
| ● | recorded AFFO of $2.1 million, or $0.05 per share, compared to $2.3 million, or $0.05 per share, for the same period in 2025; |
| ● | completed the disposition of one property in the West Coast region for consideration of $9.4 million, lessening our exposure in California; |
| ● | raised cash dividends by 50% to an annualized dividend of $0.36 per share, or $0.09 per quarter, of common stock and Class A Common OP unit from $0.24 per share, or $0.06 per quarter, of common stock and Class A Common OP unit; and |
| ● | redeemed all of the 68,000 Series A preferred units that remained outstanding, simplifying the balance sheet and eliminating the risk of dilutive conversion of Series A preferred units into common shares. |
Subsequent to March 31, 2026, the Company:
| ● | made repayments of $8.0 million against the Company’s lines of credit. |
CEO Comments
Luca Fabbri, President and Chief Executive Officer, commented: “The first quarter of 2026 was in line with expectations. We made progress this quarter in strengthening the quality and resilience of our portfolio, including the disposition of an additional West Coast property, which modestly reduced our exposure to higher-risk assets. We also simplified our balance sheet through the February redemption of our remaining Series A preferred units, eliminating potential dilution risk. Together, these actions position the Company with a stronger, more focused capital structure and enhanced financial flexibility going forward. In February, we raised our cash dividend by 50%, reinforcing our commitment to delivering enhanced value to shareholders. We reduced our guidance for the year due to non-cash allowances for potential loan losses under the FPI loan program. Looking ahead, we remain confident in the long-term fundamentals of the farmland REIT asset class and its ability to generate durable, attractive returns, despite ongoing disruptions and near-term volatility impacting the broader agriculture industry.”
Financial and Operating Results
| ● | The table below shows financial and operating results for the three months ended March 31, 2026 and 2025 (unaudited). |
(in thousands) | | For the three months ended March 31, | | | | | ||||
Financial Results: | | 2026 | | 2025 | | | Change | |||
Net Income | | $ | 646 | | $ | 2,093 | | | (69.1) | % |
Net income available to common stockholders ⁽¹⁾ | | $ | 0.01 | | $ | 0.03 | | | (66.7) | % |
AFFO (2) | | $ | 2,075 | | $ | 2,284 | | | (9.2) | % |
AFFO per weighted average common share | | $ | 0.05 | | $ | 0.05 | | | — | % |
Adjusted EBITDAre (2) | | $ | 5,007 | | $ | 5,682 | | | (11.9) | % |
| | | | | | | | | | |
Operating Results: | | | | | | | | | | |
Total Operating Revenues | | $ | 10,102 | | $ | 10,252 | | | (1.5) | % |
Net Operating Income (NOI) | | $ | 8,604 | | $ | 8,108 | | | 6.1 | % |
| (1) | Basic net income per share available to common stockholders. See “Note 9—Stockholders’ Equity and Non-controlling Interests” in the Quarterly Report on Form 10-Q for the three months ended March 31, 2026, when filed, for more information. |
| (2) | The three months ended March 31, 2025 and 2026 included approximately $1.0 million and $0.5 million, respectively, of income as a result of a solar lease arrangement with a tenant. |
| ● | See “Non-GAAP Financial Measures” below for complete definitions of AFFO, Adjusted EBITDAre, and NOI and the financial tables accompanying this press release for reconciliations of net income to AFFO, Adjusted EBITDAre and NOI. |
Acquisition and Disposition Activity
| ● | During the three months ended March 31, 2026, the Company completed no acquisitions of properties. |
| ● | During the three months ended March 31, 2026, the Company completed dispositions consisting of one property for approximately $9.4 million in consideration and recognized a loss on sale of $0.3 million. |
Balance Sheet
| ● | The Company had total debt outstanding of approximately $232.8 million at March 31, 2026 compared to total debt outstanding of approximately $161.6 million at December 31, 2025. The Company used approximately $68.2 million of debt in February 2026 to redeem all outstanding Series A preferred units. |
| ● | At March 31, 2026, the Company had access to liquidity of $132.1 million, consisting of $17.7 million in cash and $114.4 million in undrawn availability under its credit facilities. The Company’s estimated debt to enterprise value was approximately 33% at March 31, 2026. |
| ● | As of April 24, 2026, the Company had 43,910,214 shares of common stock outstanding on a fully diluted basis. |
Dividend Declarations
On April 28, 2026, the Company’s Board of Directors declared a quarterly cash dividend of $0.09 per share of common stock and Class A Common OP unit. The dividends are payable on July 15, 2026 to stockholders and common unit holders of record as of July 1, 2026.
2026 Earnings Guidance and Supplemental Package
The Company’s 2026 AFFO per share earnings guidance decreased compared to the prior quarter. For details, please see page 15 of the supplemental package, which can be accessed through the Investor Relations section of the Company's website.
Conference Call Information
The Company has scheduled a conference call on April 30, 2026, at 11:00 a.m. (U.S. Eastern Time) to discuss the financial results and provide a company update.
The call can be accessed live over the phone by dialing 1-800-715-9871 and using the conference ID 5472282. The conference call will also be available via a live listen-only webcast that can be accessed through the Investor Relations section of the Company's website, www.farmlandpartners.com.
A replay of the conference call will be available beginning shortly after the end of the event until May 10, 2026, which can be accessed by dialing 1-800-770-2030 and using the playback ID 5472282. A replay of the webcast will also be accessible on the Investor Relations section of the Company's website for a limited time following the event.
About Farmland Partners Inc.
Farmland Partners Inc. is an internally managed real estate company that owns and seeks to acquire high-quality North American farmland and makes loans to third-party farmers (both tenant and non-tenant) and landowners secured by farm real estate and/or other agricultural related assets. As of March 31, 2026, the Company owned approximately 70,400 acres of farmland in 11 states, including Arkansas, California, Colorado, Illinois, Indiana, Louisiana, Missouri, Nebraska, South Carolina, Texas and West Virginia. In addition, the Company owns land and buildings for four agriculture equipment dealerships in Ohio leased to Ag Pro under the John Deere brand. The Company elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with the taxable year ended December 31, 2014. Additional information: www.farmlandpartners.com or (720) 452-3100.
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the federal securities laws, including, without limitation, statements with respect to our outlook and the outlook for the farm economy generally, proposed and pending acquisitions and dispositions, financing activities, crop yields and prices and anticipated rental rates. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” or similar expressions or their negatives, as well as statements in future tense. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs and expectations, such forward-looking statements are not predictions of future events or guarantees of future performance, and our actual results could differ materially from those set forth in the forward-looking statements. Some factors that might cause such a difference include the following: the ongoing wars in Ukraine and Iran and other geopolitical tensions and their impacts on the world agriculture market, world food supply, the farm economy generally, and our tenants’ businesses; changes in trade policies in the United States and other countries that import agricultural products from the United States, including the imposition of tariffs; high inflation and elevated interest rates; the onset of an economic recession in the United States and other countries that impact the farm economy; extreme weather events, such as droughts, tornadoes, hurricanes, wildfires or floods; the impact of future public health crises on our business and on the economy and capital markets generally; general volatility of the capital markets and the market price of the Company’s common stock; changes in the Company’s business strategy, availability, terms and deployment of capital; the Company’s ability to refinance existing indebtedness at or prior to maturity on favorable terms, or at all; availability of qualified personnel; changes in the Company’s industry, interest rates or the general economy; adverse developments related to crop yields or crop prices; the degree and nature of the Company’s competition; the outcomes of ongoing litigation; the timing, price or amount of repurchases, if any, under the Company's share repurchase program; the ability to consummate acquisitions or dispositions under contract; and the other factors described in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, and the Company’s other filings with the Securities and Exchange Commission. Any forward-looking information presented herein is made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.
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Farmland Partners Inc.
Consolidated Balance Sheets
As of March 31, 2026 (Unaudited) and December 31, 2025
(in thousands, except par value and share data)
| | March 31, | | December 31, | ||
| | 2026 | | 2025 | ||
ASSETS | | | | | | |
Land, at cost | | $ | 555,461 | | $ | 565,002 |
Grain facilities | |
| 7,242 | |
| 7,476 |
Groundwater | |
| 8,858 | |
| 8,858 |
Irrigation improvements | |
| 22,804 | |
| 22,741 |
Drainage improvements | |
| 6,401 | |
| 6,401 |
Permanent plantings | | | 28,015 | | | 28,049 |
Other | | | 3,222 | |
| 3,334 |
Construction in progress | |
| 1,216 | |
| 1,190 |
Real estate, at cost | |
| 633,219 | |
| 643,051 |
Less accumulated depreciation | |
| (27,364) | |
| (26,783) |
Total real estate, net | |
| 605,855 | |
| 616,268 |
Cash and cash equivalents | |
| 17,741 | |
| 9,293 |
Loans and financing receivables, net | |
| 77,594 | |
| 80,232 |
Right of use asset, net | | | 125 | | | 169 |
Accounts receivable, net | |
| 2,300 | |
| 4,408 |
Derivative asset | | | — | | | 141 |
Inventory | |
| 2,779 | |
| 2,316 |
Equity method investments | | | 3,863 | |
| 4,245 |
Prepaid and other assets | |
| 1,457 | |
| 1,993 |
TOTAL ASSETS | | $ | 711,714 | | $ | 719,065 |
| | | | | | |
LIABILITIES AND EQUITY | | | | | | |
LIABILITIES | | | | | | |
Mortgage notes and bonds payable, net | | $ | 231,787 | | $ | 160,842 |
Lease liability | | | 125 | | | 169 |
Dividends payable | |
| 4,044 | |
| 11,483 |
Accrued interest | |
| 2,133 | |
| 2,116 |
Accrued property taxes | |
| 1,685 | |
| 1,411 |
Deferred revenue | |
| 5,315 | |
| 1,243 |
Accrued expenses | |
| 3,117 | |
| 3,831 |
Total liabilities | |
| 248,206 | |
| 181,095 |
| | | | | | |
Commitments and contingencies | | | | | | |
| | | | | | |
Redeemable non-controlling interest in operating partnership, Series A preferred units | | | — | | | 70,583 |
| | | | | | |
EQUITY | | | | | | |
Common stock, $0.01 par value, 500,000,000 shares authorized; 43,617,201 shares issued and outstanding at March 31, 2026, and 43,093,127 shares issued and outstanding at December 31, 2025 | |
| 436 | |
| 431 |
Additional paid in capital | |
| 525,785 | |
| 520,899 |
Retained earnings | |
| 117,750 | |
| 117,314 |
Cumulative dividends | |
| (183,574) | |
| (179,641) |
Other comprehensive income | |
| — | |
| 350 |
Non-controlling interests in operating partnership | |
| 3,111 | |
| 8,034 |
Total equity | |
| 463,508 | |
| 467,387 |
| | | | | | |
TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS IN OPERATING PARTNERSHIP AND EQUITY | | $ | 711,714 | | $ | 719,065 |
Consolidated Statements of Operations of Operations
Farmland Partners Inc.
Consolidated Statements of Operations
Three Months Ended March 31, 2026 and 2025 (Unaudited)
(in thousands except per share amounts)
| | For the Three Months Ended | ||||
| | March 31, | ||||
| | 2026 | | 2025 | ||
OPERATING REVENUES: | | | | | | |
Rental income | | $ | 6,297 | | $ | 6,970 |
Crop sales | | | 264 | | | 847 |
Other revenue | |
| 3,541 | |
| 2,435 |
Total operating revenues | |
| 10,102 | |
| 10,252 |
| | | | | | |
OPERATING EXPENSES | | | | | | |
Depreciation, depletion and amortization | |
| 910 | |
| 1,173 |
Property operating expenses | |
| 1,216 | |
| 1,480 |
Cost of goods sold | | | 282 | | | 664 |
Provision for credit loss allowance | | | 1,819 | | | 69 |
Acquisition and due diligence costs | |
| — | |
| 5 |
General and administrative expenses | |
| 1,926 | |
| 2,552 |
Legal and accounting | |
| 367 | |
| 444 |
Other operating expenses | | | — | | | 12 |
Total operating expenses | |
| 6,520 | |
| 6,399 |
| | | | | | |
OTHER (INCOME) EXPENSE: | | | | | | |
Other (income) | | | (26) | | | (133) |
(Income) loss from equity method investment | | | (21) | | | 1 |
(Gain) loss on disposition of assets, net | | | 255 | | | (763) |
Interest expense | |
| 2,721 | | | 2,638 |
Total other expense | |
| 2,929 | |
| 1,743 |
| | | | | | |
Net income before income tax expense | | | 653 | | | 2,110 |
| | | | | | |
Income tax expense | | | 7 | |
| 17 |
| | | | | | |
NET INCOME | |
| 646 | |
| 2,093 |
| | | | | | |
Net (income) attributable to non-controlling interests in operating partnership | |
| (6) | | | (54) |
| | | | | | |
Net income attributable to the Company | | | 640 | | | 2,039 |
| | | | | | |
Dividend equivalent rights allocated to performance-based unvested restricted shares | | | (8) | | | (4) |
Nonforfeitable distributions allocated to time-based unvested restricted shares | | | (22) | | | (20) |
Distributions on Series A Preferred Units | | | (204) | | | (743) |
| | | | | | |
Net income available to common stockholders of Farmland Partners Inc. | | $ | 406 | | $ | 1,272 |
| | | | | | |
Basic and diluted per common share data: | | | | | | |
Basic net income available to common stockholders | | $ | 0.01 | | $ | 0.03 |
Diluted net income available to common stockholders | | $ | 0.01 | | $ | 0.03 |
Basic weighted average common shares outstanding | |
| 43,197 | |
| 45,590 |
Diluted weighted average common shares outstanding | |
| 43,197 | |
| 45,590 |
Dividends declared per common share - regular and special | | $ | 0.09 | | $ | 0.06 |
Reconciliation of Non-GAAP Measures
Farmland Partners Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended March 31, 2026 and 2025 (Unaudited)
| | For the three months ended March 31, | ||||
(in thousands except per share amounts) | | 2026 | | 2025 | ||
Net income | | $ | 646 | | $ | 2,093 |
(Gain) loss on disposition of assets, net | | | 255 | | | (763) |
Depreciation, depletion and amortization | |
| 910 | | | 1,173 |
FFO (1) | | $ | 1,811 | | $ | 2,503 |
| | | | | | |
Stock-based compensation | |
| 468 | | | 519 |
Real estate related acquisition and due diligence costs | | | — | | | 5 |
Distributions on Series A Preferred Units | | | (204) | | | (743) |
AFFO (1) | | $ | 2,075 | | $ | 2,284 |
| | | | | | |
AFFO per diluted weighted average share data: | | | | | | |
| | | | | | |
AFFO weighted average common shares | |
| 43,935 | |
| 47,192 |
| | | | | | |
Net income available to common stockholders of Farmland Partners Inc. | | $ | 0.01 | | $ | 0.03 |
Income available to redeemable non-controlling interest and non-controlling interest in operating partnership | | | 0.00 |
|
| 0.03 |
Depreciation, depletion and amortization | |
| 0.02 | |
| 0.02 |
Stock-based compensation | |
| 0.01 | |
| 0.01 |
(Gain) loss on disposition of assets, net | | | 0.01 | | | (0.02) |
Distributions on Series A Preferred Units | |
| 0.00 | | | (0.02) |
AFFO per diluted weighted average share (1) | | $ | 0.05 | | $ | 0.05 |
| | For the three months ended March 31, | ||||
(in thousands) | | 2026 | | 2025 | ||
Net income | | $ | 646 | | $ | 2,093 |
Interest expense | | | 2,721 | |
| 2,638 |
Income tax expense | | | 7 | |
| 17 |
Depreciation, depletion and amortization | | | 910 | |
| 1,173 |
(Gain) loss on disposition of assets, net | | | 255 | | | (763) |
EBITDAre (1) | | $ | 4,539 | | $ | 5,158 |
| | | | | | |
Stock-based compensation | | | 468 | | | 519 |
Real estate related acquisition and due diligence costs | | | — | | | 5 |
Adjusted EBITDAre (1) | | $ | 5,007 | | $ | 5,682 |
| (1) | The three months ended March 31, 2025 and 2026 included approximately $1.0 million and $0.5 million, respectively, of income as a result of a solar lease arrangement with a tenant. |
Farmland Partners Inc.
Reconciliation of Non-GAAP Measures
Three Months Ended March 31, 2026 and 2025 (Unaudited)
| | For the three months ended March 31, | ||||
($ in thousands) | | 2026 | | 2025 | ||
OPERATING REVENUES: | | | | | | |
Rental income | | $ | 6,297 | | $ | 6,970 |
Crop sales | | | 264 | | | 847 |
Other revenue | |
| 3,541 | |
| 2,435 |
Total operating revenues | |
| 10,102 | |
| 10,252 |
| | | | | | |
Property operating expenses | | | 1,216 | | | 1,480 |
Cost of goods sold | | | 282 | | | 664 |
NOI | | | 8,604 | | | 8,108 |
| | | | | | |
Depreciation, depletion and amortization | | | 910 | | | 1,173 |
Provision for credit loss allowance | | | 1,819 | | | 69 |
Acquisition and due diligence costs | | | — | | | 5 |
General and administrative expenses | | | 1,926 | | | 2,552 |
Legal and accounting | | | 367 | | | 444 |
Other operating expenses | | | — | | | 12 |
Other (income) | | | (26) | | | (133) |
(Income) loss from equity method investment | | | (21) | | | 1 |
(Gain) loss on disposition of assets, net | | | 255 | | | (763) |
Interest expense | | | 2,721 | | | 2,638 |
Income tax expense | | | 7 | | | 17 |
NET INCOME | | $ | 646 | | $ | 2,093 |
Non-GAAP Financial Measures
The Company considers the following non-GAAP measures to be useful to investors as key supplemental measures of its performance: FFO, NOI, AFFO, EBITDAre and Adjusted EBITDAre. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income or loss as a measure of the Company’s operating performance. FFO, NOI, AFFO, EBITDAre and Adjusted EBITDAre, as calculated by the Company, may not be comparable to other companies that do not define such terms in exactly the same way as the Company.
FFO
The Company calculates 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. Management presents FFO as a supplemental performance measure because it believes that FFO is beneficial to investors as a starting point in measuring the Company’s 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. The Company also believes that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare the Company’s operating performance with that of other REITs. However, other equity REITs may not calculate FFO in accordance with the Nareit definition as the Company does, and, accordingly, the Company’s FFO may not be comparable to such other REITs’ FFO.
AFFO
The Company calculates AFFO by adjusting FFO to exclude the income and expenses that the Company believes are not reflective of the sustainability of the Company’s ongoing operating performance, including, but not limited to, real estate related acquisition and due diligence costs, stock-based compensation and incentive, deferred impact of interest rate swap terminations and distributions on the Company’s preferred units.
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 the Company’s operating performance. Therefore, in addition to FFO, the Company presents 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 the Company’s 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 the Company’s 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 the Company’s performance in comparison to other REITs. However, other REITs may use different methodologies for calculating AFFO and AFFO per share, fully diluted and, accordingly, the Company’s 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 an alternative to net income (loss) earnings per share (determined in accordance with GAAP) as a measure of the Company’s liquidity, nor are they indicative of funds available to fund the Company’s cash needs, including its ability to make distributions.
EBITDAre and Adjusted 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 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.
The Company calculates Adjusted EBITDAre by adjusting EBITDAre for certain items such as stock-based compensation and incentive and real estate related acquisition and due diligence costs that the Company considers necessary to understand its operating performance. The Company believes that Adjusted EBITDAre provides useful supplemental information to investors regarding the Company’s ongoing operating performance that, when considered with net income and EBITDAre, is beneficial to an investor’s understanding of the Company’s operating performance. However, EBITDAre and Adjusted EBITDAre have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP.
In prior periods, the Company has presented EBITDA and Adjusted EBITDA. In accordance with Nareit’s recommendation, beginning with the Company’s reported results for the three months ended March 31, 2018, the Company is reporting EBITDAre and Adjusted EBITDAre in place of EBITDA and Adjusted EBITDA.
Net Operating Income (NOI)
The Company calculates net operating income (NOI) as total operating revenues (rental income, tenant reimbursements, crop sales and other revenue), less property operating expenses (direct property expenses and real estate taxes), less cost of goods sold. Since net operating income excludes general and administrative expenses, interest expense, depreciation and amortization, acquisition-related expenses, other income and losses and extraordinary items, it provides a performance measure that, when compared year over year, reflects the revenues and expenses directly associated with owning and leasing farmland real estate, providing a perspective not immediately apparent from net income. However, net operating income should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect general and administrative expenses, interest expense, depreciation and amortization costs, other income and losses.