Gladstone Land (NASDAQ:LAND) reported a second-quarter net loss of approximately $8.5 million, while management pointed to improving almond and pistachio pricing, potential revenue from re-leasing vacant acreage, and plans to continue reviewing farms for possible sales.
Chief Executive Officer David Gladstone said the company owns about 98,000 acres across 142 farms in 14 states, along with approximately 56,000 acre-feet of water assets in California. The company made no acquisitions or dispositions during the quarter, though it sold two citrus farms in Florida for roughly $3 million after quarter-end.
Crop Prices Support Outlook for Modified Leases
Management said strong demand and rising prices for almonds and pistachios are supporting farms operating under modified lease arrangements. These arrangements reduce growers’ fixed costs while giving Gladstone Land greater participation in crop-price upside.
Bill Reiman, executive vice president of West Coast operations, said almond prices have risen almost weekly and described current prices as the strongest in 10 years, citing market reports. He also said a major pistachio processor indicated that final pricing for the 2025 crop could be at least $2.70 per pound for split in-shell pistachios, above the company’s prior expectations.
The processor also announced an initial $2.50-per-pound price for the 2026 crop, which Reiman said was roughly two-thirds higher than the prior year’s initial pricing. Management expects most revenue related to the 2025 crop’s final pricing to be recognized in the fourth quarter.
However, pistachio yields are expected to be lower in 2026. Reiman said the crop is in a naturally lower-production year and was further affected by a March heat event that disrupted pollination and led to crop drop, blanking and smaller sizes. Gladstone Land has opened crop-insurance claims for blocks expected to fall below insurance thresholds.
The company began almond harvesting July 28 and expects yields on its properties to be at least comparable with last year, potentially modestly higher. In wine grapes, Reiman said the 2026 crop appears light, while bulk wine inventories are approaching more manageable levels. He said the industry may be moving beyond its oversupply situation, though conditions remain uncertain.
Second-Quarter Financial Results and Capital Activity
Chief Financial Officer Lewis Parrish said Gladstone Land recorded a net loss attributable to common shareholders of approximately $13.5 million, or $0.32 per share, in the second quarter. Adjusted funds from operations, or AFFO, was negative $1.6 million, or negative $0.04 per share, improving from negative $3.5 million, or negative $0.10 per share, in the year-earlier quarter.
Parrish attributed the year-over-year AFFO improvement primarily to higher operating cash revenue and lower interest expense, partly offset by increased property operating expenses.
- Fixed-base cash rents rose about $900,000 year over year, aided by cash collections from tenants still on non-accrual status and leases signed over the prior year.
- Participation rents increased slightly, primarily because of higher almond pricing for the 2025 crop.
- Direct farming operations generated a net profit of about $590,000, driven by an orange harvest and sale at a Florida farm after an earlier tenant lease termination, as well as higher almond prices.
- Recurring cash operating expenses rose about $560,000, reflecting higher professional fees related to protecting California water rights and costs for vacant, directly operated and non-accrual properties.
One cash payment from a tenant on non-accrual status contributed about $700,000 of quarterly fixed-rent revenue, Parrish said. Management is not treating that amount as recurring until the tenant establishes a consistent record of timely payments.
The company also recorded an impairment charge related to a property comprising four farms in Arizona. Parrish said Gladstone Land signed a purchase and sale agreement with a buyer after the quarter ended and reduced the property’s value to the agreed sale price. The transaction was expected to close in late third quarter or early fourth quarter.
Liquidity, Vacancies and Water Conditions
Gladstone Land had approximately $125 million of immediately available capital and about $110 million of unpledged properties available for additional collateral, Parrish said. More than 95% of borrowings were fixed-rate, with a weighted average interest rate of 3.45% and an average remaining fixed term of 2.3 years.
During the quarter, the company added unencumbered properties to credit facilities, increasing available capital by about $50 million. It issued approximately $14 million of common stock through its at-the-market program earlier in the quarter, using proceeds to repay its credit line and repurchase preferred stock. Since April 1, it repurchased $13 million of preferred stock at an average repurchase yield of 7.2%, generating a gain of about $1.1 million.
Management said it expects to renew six leases expiring in the next six months, which represent approximately 3.5% of annualized leasing revenue, at generally similar terms. For vacant properties, the company is pursuing solar, cattle and fallowing arrangements. Parrish said three of the closest potential resolutions could add about $1.5 million in annual revenue.
On water, Reiman said a recent 3% increase in federal water allocations reduced pricing pressure for supplemental water. He said reservoir levels remain above historical averages and the prospect of a strong El Niño winter could create water-acquisition and storage opportunities. Management expects water expense pressure to ease heading into winter.
David Gladstone said demand for prime farmland growing berries and vegetables remains stable, especially along California’s coast, while economics for certain permanent crops have improved. Still, he said it was too early to conclude that the company was fully past the challenges affecting permanent crops and water availability.
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.
