Craig Kucera

Craig Kucera asked if GNL has reached its target for reducing c-store exposure, which had decreased from 5% to just over 1%. He also inquired about the 2026 office lease expirations, asking if they are concentrated in the U.S. or Europe and how discussions are progressing. Finally, he asked if GNL expects to sell U.S. office properties as effectively as overseas assets, given the strong McLaren sale.

Answer

CEO Michael Weil confirmed that GNL is comfortable with its current c-store exposure, having significantly reduced it and addressed operator-driven risks. He stated that 2026 office lease expirations, representing about 3.1% of straight-line rent, are more heavily weighted to Europe and the U.K., with discussions progressing well and renewals expected. Mr. Weil also indicated that GNL sees the U.S. office market as equivalently strong for dispositions, expecting to prove value there as well, despite the unique nature of the McLaren sale.

Craig Kucera asked if the company has reached its desired level of c-store exposure reduction, having brought it down significantly. He also inquired about the concentration of 2026 office lease expirations (U.S. vs. Europe) and the progress of renewal discussions. Finally, Mr. Kucera asked if the company expects to sell U.S. office assets as effectively as European ones, given the strong McLaren sale.

Answer

CEO Michael Weil confirmed that the company is comfortable with its current c-store exposure, having reduced it to approximately 1% and removed significant operator-driven risk. He stated that 2026 office lease expirations, representing about 3.1% of straight-line rent, are more heavily weighted to Europe and the U.K., with discussions progressing well and renewals expected. Mr. Weil expressed confidence in the U.S. office market's strength, expecting to sell U.S. office assets at similarly strong valuations as the McLaren sale, noting that the U.S. market is equivalently robust.

Craig Kucera asked if the addition of three new counterparties primarily drove the $690 million funded this quarter or if existing relationships contributed more. He also questioned the certainty of the $2 billion guidance for 2026 and whether Millrose would consider issuing preferred stock as a capital source.

Answer

Robert Nitkin, COO, stated that the majority of the growth came from existing counterparties, with initial deals from the new ones. Darren Richman, President and CEO, confirmed the $2 billion guidance is their best estimate, acknowledging that last year's volume included M&A not factored into current forecasts. He also indicated that preferred stock is not their preference, aiming for a clean capital structure, but would potentially entertain it.

Craig Kucera asked if the three new counterparties added this quarter were the primary drivers of the $690 million funded from third parties, or if existing counterparties contributed more. He also questioned the certainty of the $2 billion guidance for 2026, comparing it to last year's stretched targets. Additionally, he inquired about the average sales price of homes delivered under third-party agreements compared to Lennar, and whether preferred equity is considered a potential capital source given the constraint of not issuing common equity below book value.

Answer

Robert Nitkin, COO, clarified that three new counterparties were added, but the majority of the growth came from existing partners. Darren Richman, President and CEO, stated that the $2 billion guidance is their best estimate, acknowledging it won't be a straight line and doesn't include potential M&A, but expressed confidence in meeting the target. He declined to provide specific details on the average sales price of homes from third-party agreements. Regarding capital, Darren Richman indicated that while preferred equity is not their preference, they might potentially entertain it, but their goal is to keep the capital structure clean and transparent.

Craig Kucera asked for a breakout of Q4 rent components, including percentage rents and lease terminations, given higher-than-expected base rent, and how much of the 2026 guidance is driven by occupancy gains versus rent growth. He also inquired about the volume of acquisition deals and the company's appetite for growth.

Answer

Scott Hogan, Chief Financial Officer, clarified that there were no large lease terminations in Q4 2025, and percentage rent typically contributes $800,000 to $1 million in Q4. Scott Hogan, Chief Financial Officer, stated that the 2026 guidance is primarily driven by the strength of rent growth and leasing, rather than significant occupancy gains. Dave Holeman, Chief Executive Officer, noted a pickup in 2025 acquisitions (nearly $100 million), funded by recycling and Pillarstone proceeds, and sees slightly more activity in tight markets, focusing on assets where rents can be improved through re-tenanting and re-merchandising, guided by disciplined capital allocation for earnings and value growth.

Craig Kucera asked for a breakdown of Whitestone REIT's Q4 revenue, specifically the contribution from percentage rents and lease terminations, given that base rent was higher than anticipated. He also inquired about the drivers of the 2026 guidance, distinguishing between occupancy gains and rent growth, and the company's current appetite for acquisitions given its liquidity and capital recycling plans.

Answer

Scott Hogan, Chief Financial Officer, clarified that there were no large lease terminations in Q4 2025 comparable to 2024, and percentage rent typically contributes around $800,000-$1 million (1-2 cents per share) in the fourth quarter. He stated that the 2026 guidance is primarily driven by the strength of rent growth and leasing, rather than significant occupancy gains. Dave Holeman, Chief Executive Officer, noted that Whitestone REIT completed nearly $100 million in acquisitions in 2025, largely funded by capital recycling and Pillarstone settlement proceeds. He indicated a slightly positive trend in market activity and a strong appetite for growth, focusing on disciplined capital allocation to enhance earnings and property value.

Craig Kucera from Lucid Capital Markets inquired about the specific tenant categories driving leasing demand, the reason for the quarterly increase in real estate taxes, and the company's long-term leverage target.

Answer

COO Christine Mastandrea identified food/restaurants, grocery, and health/beauty/wellness as the consistently strong categories driving leasing. CFO J. Scott Hogan explained the Q3 real estate tax increase was an accrual adjustment based on anticipated rate hikes in Harris County, which will be trued up in Q4. Hogan also stated the long-term leverage goal is to continue deleveraging towards the low 6x or high 5x range.

Craig Kucera asked for clarification on the lease structure of the five repositioned farms, specifically if they would continue with no base rents and higher participation rents, and how revenue recognition would be phased into 2026 and 2027. He also inquired about the percentage of revenue recognized in Q4 2025 versus expected in 2026 for restructured leases, the timing of variable payments, expectations for Q1 interest patronage, the funding source for the Series D preferred stock redemption, and the company's interest in expanding into lending to farmers.

Answer

Lewis Parrish, CFO, and Assistant Treasurer, confirmed the lease structure would be similar to 2025, with most 2026 crop revenue recognized in 2027. He estimated 65%-75% of pistachio farm revenue would be recognized in the first year, with potential for a higher percentage in the subsequent year if marketing bonuses increase. Bill Reiman, EVP of West Coast Operations, added that they are holding out for higher almond prices on one farm. Lewis Parrish noted that some Q1 revenue might be recognized due to an early pistachio bonus payment, but the bulk would still be in Q3 and Q4. He projected Q1 2026 interest patronage to be 10%-15% less than 2025 due to loan balance decreases. The Series D redemption was funded by a draw on the line of credit, with $10 million currently outstanding at a 5.69% variable rate. Both Lewis Parrish and Bill Reiman stated that while a loan program has been discussed and is a long-term consideration, the current risk-return profile is not suitable for implementation.

Craig Kucera inquired about the lease structure for the five repositioned farms, specifically regarding base rents, participation rents, and the timing of revenue recognition for the 2026 crop year. He also asked about the percentage of revenue recognized from restructured leases in Q4 2025, the expected timing of variable payments, and the company's outlook on interest patronage for Q1. Furthermore, Kucera questioned the funding sources for the Series D redemption and the company's strategy regarding lending to farmers.

Answer

Lewis Parrish, CFO, confirmed the similar lease structure with no base rent or lease incentives and explained the revenue recognition timing for 2025 and 2026 crops, noting that most 2026 crop revenue would come in 2027. Bill Reiman, EVP of West Coast Operations, added details on pistachio bonus payments and the call pool strategy for almonds, indicating a potential for higher subsequent year percentages. Parrish also provided expectations for Q1 interest patronage (10-15% less than 2025) and stated the Series D redemption was funded by the ATM program and a $10 million draw on the line of credit. Both Parrish and Reiman discussed the loan program, indicating it's under consideration for the long term but not actively pursued due to current risk-return profiles.

Craig Kucera from Lucid Capital Markets asked about expectations for interest patronage in the first quarter, the composition of lease expirations for the remainder of the year (permanent vs. row crop), the company's plans for repurchasing preferred stock, and the drivers behind the recent increase in real estate expenses.

Answer

CFO Lewis Parrish projected that Q1 interest patronage would be about 10% lower due to loan payoffs. He detailed that while near-term expirations are mostly row crops, the majority of leases expiring in the second half of the year are permanent crop farms. Executive David Gladstone affirmed the company sees buying back preferred stock as an "easy way to make money." Parrish attributed the rise in real estate expenses to costs associated with vacant, direct-operated, and non-accrual properties, including property taxes that tenants failed to pay.

Craig Kucera of Lucid Capital Markets questioned the specifics of the four restructured farm leases, asking about their crop types and locations. He also inquired about the timing of the fixed rent impact, the drivers of the strong Q3 participation rent, and the outlook for participation rent in the fourth quarter.

Answer

Executive Lewis Parrish identified the four restructured farms as two pistachio and two wine grape properties. He explained that a small rent impact occurred in Q3, with a more significant impact beginning in Q4 2024. Parrish attributed the year-over-year strength in Q3 participation rent primarily to higher production at pistachio farms. While not providing specific guidance, he noted that the company hopes Q4 participation rent will follow historical trends of being stronger than Q3.

Craig Kucera requested more granularity on the ABR recognition timing for the "Signed, Not Open" pipeline, specifically for 2026 and 2027.

Answer

CFO Philip Mays indicated that recognition would be "ratable" for both 2026 and 2027, with a slight ramp-up towards the latter half of 2026.

Craig Kucera asked about the mark-to-market lease-up opportunities at Pompano Citi Centre, the specific categories driving demand in CTO Realty Growth's shopping centers, the expected repayment of the Watters loan, the anticipated drawdown of the remaining Rivanna loan balance, and further granularity on the ABR recognition timing for the Signed, Not Open pipeline in 2026 and 2027.

Answer

President and CEO John Albright noted JCPenney's minimal rent at Pompano Citi Centre as a significant long-term mark-to-market opportunity, but emphasized immediate focus on leasing existing vacancies. He identified strong national brands like TJ Maxx and Ross as key demand drivers. Albright confirmed the Watters loan is expected to be repaid and the Rivanna loan funds will be used for master development work. CFO Philip Mays indicated that ABR recognition from the Signed, Not Open pipeline would be ratable, possibly ramping up slightly more in the latter half of 2026 and similarly in 2027.

Craig Kucera of Lucid Capital Markets asked if the investment pipeline is still primarily core properties, inquired about the potential investment volume for the year, questioned the CapEx needs at Ashley Park, and asked about the timing of rent commencement for the signed-not-open pipeline.

Answer

Executive John Albright responded that the pipeline is evolving to include more varied opportunities beyond core properties and that annual investment volume could exceed the previously guided $40-$50 million. He confirmed Ashley Park requires no major renovations, only tenant-specific CapEx. He also stated that rent from the signed-not-open pipeline will begin to come online in the second half of the year, building through Q3 and Q4.

Craig Kucera of Lucid Capital Markets asked about CTO's 2025 leverage strategy, given planned activity without dispositions. He also questioned if the mark-to-market opportunity at the Carolina Pavilion acquisition was anticipated during underwriting and asked for updates on the revVana development schedule in D.C.

Answer

Executive John Albright stated the long-term goal is to lower leverage and expressed optimism about the stock's backdrop, which could support accretive acquisitions. He confirmed the mark-to-market opportunity at Carolina Pavilion was part of the underwriting, with the tenant bankruptcies accelerating the value-creation plan. He also reported no development delays for the revVana project, citing strong multifamily and land demand in Northern Virginia.

Craig Kucera asked about the expected mix of property versus structured finance investments, the potential for future earnings from mitigation credits, the collateral details for the $44 million mortgage investment, and the CapEx outlook for the newly acquired portfolio.

Answer

Executive John Albright confirmed they are looking at a smaller, high-quality structured finance deal that is strategic and could be a 'loan to own' opportunity. He stated that earnings from mitigation credits are now in the 'rearview mirror.' For the Dulles mortgage, he detailed that the collateral is the entire mixed-use project, with multifamily being the primary value driver. He also noted that CapEx for the newly acquired portfolio was already addressed in the acquisition price, and they see further upside from potential tenant changes.

Craig Kucera inquired about the status of transactions previously expected to close in Q4, the estimated dollar amount of potential Q1 closings, the recognition of a $1.5 million lease termination fee in Q4, and the board's philosophical target for the core FFO payout ratio.

Answer

President Buzz Cooper confirmed one transaction from Q4 might close in Q1, with an estimated value of $10 million, while another fell through. CFO Gary Gerson confirmed the $1.5 million lease termination fee was recognized in Q4, noting the property remained occupied. Gerson also stated that a core FFO payout ratio around 85% is a reasonable assumption, with a goal to lower it going forward.

Craig Kucera asked for an update on transactions expected to close in Q4 of the previous year, inquiring if they were still active. He also asked for the estimated dollar amount of transactions expected to close in Q1. Additionally, he sought confirmation on whether a previously discussed $1.5 million lease termination fee was recognized in Q4 and asked about the board's philosophical target for the Core FFO payout ratio, specifically if it was around 85%.

Answer

Buzz Cooper, President, confirmed that one transaction from the previous quarter might close by the end of Q1, while another fell through. He estimated the Q1 closing amount to be around $10 million. Gary Gerson, CFO and Assistant Treasurer, confirmed that the $1.5 million termination fee was indeed recognized in Q4, noting that a new tenant immediately occupied the building, maintaining occupancy. Regarding the incentive waiver, Mr. Cooper stated that a Core FFO payout ratio of around 85% is a reasonable assumption, though the company aims to lower it in the future.

Craig Kucera from Lucid Capital Markets asked for clarification on the increase in G&A expenses, the company's leverage strategy following recent acquisitions, and details on recent lease renewal activity.

Answer

CFO Gary Gerson attributed the higher G&A to prepaid offering cost write-offs, sales closing costs, and annual meeting expenses. He affirmed the company's goal is to reduce leverage, not increase it further. President Buzz Cooper provided color on leasing, noting a recent renewal had a 2.5% rent increase and highlighted a strong renewal outlook for 2026 and 2027 expirations, with the portfolio management team actively engaging tenants well in advance.

Craig Kucera of B. Riley Securities inquired about the drivers behind the recent increase in acquisition volume, progress on addressing the larger 2026 and 2027 lease expirations, the leasing spread on a recent renewal, and the maturity dates for the company's interest rate swaps.

Answer

President Buzz Cooper attributed the acquisition success to strong broker relationships and a reputation for not re-trading deals. He confirmed the company is proactively working on 2026 and 2027 expirations. Regarding a recent renewal, he noted a small short-term rent drop but expects a future pickup. CFO Gary Gerson stated that the interest rate swaps are hedged through the loan maturities in late 2027 and early 2028.

Craig Kucera asked for the expected dollar amount of acquisitions and sales in 2025. He also inquired if the remaining 2025 lease expirations are office or industrial, and whether a lease reclassified as a sales-type lease would still be included in the base management fee calculation.

Answer

President Arthur 'Buzz' Cooper stated he is hopeful for acquisition volume to exceed $100 million in 2025. He clarified that remaining 2025 expirations include one industrial asset with a purchase option and two office assets with renewal papers exchanged. CFO Gary Gerson confirmed that the reclassified sales-type lease will still be included in the base management fee calculation.

Craig Kucera asked about Rithm Property Trust's (RPT) expected earnings impact and accretion from its pro rata share in the Paramount transaction, and inquired about the strategy for deploying Genesis-originated loans into RPT, particularly concerning the timing of a capital raise to achieve a larger capital base and move the common stock closer to book value.

Answer

Michael Nierenberg, CEO of Rithm Property Trust, clarified that RPT holds $50 million of the Paramount deal on its balance sheet, and its earnings impact will be a pro rata share, likely back-ended. Regarding Genesis loans, he stated that Genesis is projected to produce $6 billion-$7 billion this year, with identified loans ready for RPT's balance sheet upon a successful capital raise, ensuring no J-curve. He also mentioned sourcing third-party loans and utilizing various capital vehicles, including funds and SMAs. For Rithm Capital, Nierenberg noted its typical $1.5 billion-$2.5 billion cash and liquidity, indicating no plans to issue equity unless highly accretive.

Craig Kucera with Lucid Capital Markets inquired about the earnings impact and accretion for Rithm Property Trust (RPT) from its pro rata share in the Paramount transaction, and also asked about the strategy for deploying Genesis-originated loans into RPT and the path to a larger capital base, particularly concerning common stock valuation.

Answer

Michael Nierenberg, CEO of Rithm Property Trust, clarified that RPT holds a $50 million pro rata share of the Paramount deal, with earnings impact expected to be back-ended. He explained that Genesis is projected to produce $6-$7 billion in loans this year, with identified pools ready for RPT upon a successful capital raise, ensuring no J-curve. Nierenberg also noted that Rithm Capital maintains significant cash and liquidity but is unlikely to issue equity unless highly accretive, given its stock trades at a discount to book.

Craig Kucera asked about the inclusion of PIK interest in AFFO and whether this is expected to continue. He also inquired if developers with unfunded commitments are expected to draw down most of that capital in 2026, despite later loan maturities. He sought color on unmet conditions for the Austin Phase Two loan funding and its timeline, and clarification on the math behind the Austin Phase One loan's yield adjustment after a participation sale. Finally, he asked for details on a loan amendment this quarter.

Answer

CFO Philip Mays confirmed that PIK interest will continue to be included in AFFO, with additional disclosures provided for clarity. President and CEO John Albright fully expects unfunded commitments to be drawn down as projects progress. Philip Mays estimated Austin Phase Two funding in Q2, with a likely participation sale. For Austin Phase One, he explained the participation interest has a constant 10% rate and hyper amortizes, getting repaid first. He confirmed the loan amendment was solely an extension.

Craig Kucera asked about Alpine's expectation for including PIK interest in AFFO for the foreseeable future, given its low cash collection this quarter. He also inquired if developers are expected to draw down most unfunded commitments in 2026. Additionally, he sought color on unmet conditions for Phase II funding in Austin, the math behind the Austin Phase I loan's yield adjustment after selling participation interest, and the nature of a recent loan amendment.

Answer

CFO Philip Mays confirmed that PIK interest would continue to be included in AFFO, with a supplemental schedule detailing cash versus PIK interest. President and CEO John Albright fully expects unfunded commitments to be drawn down as projects progress. Philip Mays estimated Phase II funding in Austin for Q2, noting Alpine would likely sell another $10 million to $20 million participation interest. He explained that the participation interest has a constant 10% rate, hyper-amortizes, and is repaid first. Philip Mays confirmed the recent loan amendment was an extension.

Craig Kucera asked about the entitlement and approval risk for the Austin loans, the current Loan-to-Value (LTV) for these loans, the expected yield if a senior tranche is sold, and the development status of the Lake Coxway mixed-use project.

Answer

CEO John Albright confirmed that entitlements are in place for both phases of the Austin project, indicating no approval risk. He estimated the LTV for the Austin loans to be in the 70s on a discount NTV basis and stated the yield would be higher if a senior tranche is sold, though he declined to give specific numbers. He also noted that the Lake Coxway developer has started work, and the company is involved as additional work and pad delivery are needed.

Craig Kucera asked about the entitlement and approval risk for the Austin loans, the current Loan-to-Value (LTV) for those loans, the potential yield if a senior tranche is sold, and the development stage of the Lake Coxway mixed-use project.

Answer

CEO John Albright confirmed that there is no entitlement or approval risk for either phase of the Austin project, as all necessary entitlements are in place. He estimated the LTV for the Austin loans to be in the 70s on a discount MTV basis and stated that selling a senior tranche would result in a higher yield, though he declined to provide specific numbers. For Lake Coxway, he noted that the developer has started work, and Alpine Income Property Trust is involved as they begin additional work and pad delivery.

Craig Kucera of Lucid Capital Markets asked about yield trends in structured finance, sought clarification on the increased investment guidance, and inquired about any rent lift from the new Bass Pro Shops lease.

Answer

John Albright, President & CEO, noted that structured finance yields are strong and the environment is 'target rich.' Philip Mays, SVP, CFO & Treasurer, clarified the investment guidance increase is to redeploy repaid loan proceeds and confirmed the new 20-year Bass Pro Shops lease included a rent increase of nearly $500,000 annually.

Craig Kucera of Lucid Capital Markets asked about plans to use interest rate swaps on the floating portion of the revolver and whether the positive cap rate spread between acquisitions and dispositions is expected to continue in 2025.

Answer

CFO Philip Mays responded that the company may consider additional swaps if the revolver balance rises, but currently prefers maintaining flexibility to pay down the line. CEO John Albright stated that while some dispositions like Walgreens may not be accretive, the redeployment of capital from the zero-earning Party City and theater assets will be 'very accretive' once sold.

Craig Kucera of Lucid Capital Markets noted the increase in G&A expenses during the quarter and asked whether this was due to higher transaction volume or if it represented a new, higher run rate going forward.

Answer

Executive John Albright clarified that the higher G&A was due to one-time legal expenses and was not indicative of a new, higher run rate for the company. He indicated it was not a recurring cost.

Inquired about a variety of topics including the increase in joint venture income, an impairment charge on the Calera asset, the impact of tariffs on tenants, the status of the Costco lease and sale, and the potential for large-scale transformational transactions.

Answer

The JV income increase was a one-time accounting effect from a lease extension. The Calera asset was impaired as a sale is now preferred over leasing. Tariff impacts on tenants have been minimal so far. The Costco sale to KB Home is proceeding, with expected extensions due to bureaucratic delays. Transformational deals remain a possibility but require the right market conditions and will not be discussed until they are certain.

Craig Kucera from Lucid Capital Markets asked about the source of the sizable pickup in joint venture income, the rationale for the Calera equipment impairment, the impact of tariffs on tenants, the status of the Costco lease expiration, and any updates on potential transformational transactions.

Answer

CFO Ray Pacini attributed the JV income increase to straight-line rent accounting from a 10-year lease extension. CEO Aaron Halfacre added that they took an impairment on the Calera equipment because they now intend to sell the asset, acknowledging its aging technology. He stated that tariff impacts on tenants have been minimal. Regarding the Costco property, KB Home is expected to extend its purchase contract due to logistical delays with the city. Halfacre also confirmed that transformational deals remain a possibility but require a more conducive market environment.

Asked about private equity's appetite for investing in domestic manufacturing, inbound interest for developing excess land at their properties, whether the recently extended Fujifilm lease makes it a disposition candidate, and if the buyer of the Costco property has changed its tone.

Answer

Management believes private equity is also cautious and not accelerating investment due to market uncertainty. There is little inbound interest for land development as spec builders are sidelined, but Modiv is exploring it. The Fujifilm asset is now a potential disposition candidate. The buyer for the Costco property, KB Home, remains fully committed, citing the strength of that specific housing submarket.

Craig Kucera of Lucid Capital Markets asked about the outlook for same-store operating expenses, the pace of new home deployments for 2025, the reason for a sequential decline in interest income, and sales trends for the third quarter.

Answer

EVP and COO Brett Taft projected same-property expense growth in the 5-7% range and noted a strong sales pipeline of over $5 million. President and CEO Samuel Landy expressed confidence in the 700-800 home deployment target, highlighting positive regulatory developments from HUD. EVP and CFO Anna Chew attributed the lower interest income to the deployment of cash balances and slightly lower rates.

Craig Kucera requested color on the year-over-year decline in home sales, current sales traffic, interest rates on maturing debt, the company's capital funding strategy, and whether any large acquisition opportunities are materializing.

Answer

President and CEO Samuel Landy and EVP and CFO Anna Chew clarified that the sales decline was due to a one-time sales center liquidation in the prior year, with underlying sales actually up. EVP and COO Brett Taft added that April sales were exceptionally strong. Ms. Chew noted maturing debt has an average rate around 4% and that the company will continue to use a balanced mix of common equity, preferred equity, and debt for funding. Mr. Landy suggested the environment for property acquisitions is becoming more favorable.

Craig Kucera asked about UMH's leverage target, given the recent significant drop, and the expectations for same-store operating expense growth in 2025. He also inquired about any changes in the credit profile of the typical homebuyer and whether management had concerns about potential tariffs impacting manufactured housing builders.

Answer

EVP & CFO Anna Chew clarified that while the company is conservative, the recent capital raises were opportunistic and intended to fund annual growth needs of $120-$150 million and address upcoming debt maturities. EVP & COO Brett Taft projected 2025 operating expense growth in the 6-7% range. President & CEO Samuel Landy noted that the affordability gap is driving higher-credit buyers to their high-end homes. Brett Taft concluded that they have not yet seen any impact from tariffs on home orders or manufacturer backlogs.

Craig Kucera followed up on the rental home strategy, asking about the potential for programmatic sales, the use of recent equity proceeds to pay down higher-cost debt, and the future outlook for G&A expenses.

Answer

President and CEO Samuel Landy stated there is no desire to sell rental homes, viewing them as a finance business, but would reconsider if government programs created a significant profit opportunity. EVP and CFO Anna Chew explained the capital raised is for executing the business plan, not for paying down the modest amount of term loans payable. Samuel Landy and Chairman Eugene Landy noted G&A is not expected to increase significantly unless a large acquisition occurs, emphasizing the company is staffed for substantial future growth.

Craig Kucera from Lucid Capital Markets asked for clarification on the drivers behind the increased variable payment expectations, the demand and potential size of the company's farm lending portfolio, the specific percentage write-down on the two most significantly impaired California farms, and whether the company is now actively looking to sell assets in California.

Answer

President and CEO Luca Fabbri confirmed the improved variable payment outlook was due to crop dynamics, not lease restructurings. Executive Chairman Paul Pittman noted rising demand for farm loans but stated the program would not be expanded significantly. Regarding the impairments, CFO Susan Landi and CEO Luca Fabbri specified the write-downs on the two key farms were each in the neighborhood of 50%. Pittman added that the company is actively trying to sell the impaired farms, having already listed them for sale.

Craig Kucera of Lucid Capital Markets asked about the drivers behind the increased variable payment expectations, the demand and potential size of the farm loan portfolio, the specific percentage write-down on the impaired California farms, and whether the company is actively marketing those properties for sale.

Answer

President and CEO Luca Fabbri clarified that the improved variable payment outlook is based on crop dynamics, not lease restructurings. Executive Chairman Paul Pittman noted rising demand for farm loans but stated the portfolio won't be expanded significantly to maintain focus on owning farmland. Regarding the impairments, CFO Susan Landi and Luca Fabbri confirmed the write-downs on the two main California farms were substantial, around 50% each. Pittman added that this was due to regulatory water access reductions and confirmed the company is actively trying to sell the impaired assets.

Craig Kucera inquired about the amortization amount from FPI loan points, the recurring nature of increased solar rent, the method used to repay recent debt maturities, and the directional movement of property cap rates year-to-date.

Answer

Executive Chairman Paul Pittman and CFO Susan Landi addressed the questions. Landi stated that the company expects to recognize approximately $2.4 million in amortized points income for the year. Pittman explained that the solar rent is recurring but the initial amount was a windfall and won't repeat at the same scale. Landi clarified that recent debt was repaid using a ~$14 million draw on the line of credit plus funds from operations. Pittman noted that row crop cap rates are stable, while the California market is seeing some seller capitulation, helping to establish a market bottom.

Craig Kucera asked about the FPI Loan program, specifically the drivers behind the Q4 increase in loans outstanding and future demand. He also questioned if there has been an increase in inbound calls since the recent administration change.

Answer

Executive Chairman Paul Pittman explained that the loan program was consciously expanded to bolster cash flow following significant asset sales. He highlighted their niche as an asset-based lender comfortable with taking possession of collateral if necessary. President and CEO Luca Fabbri noted a slight uptick in loan inquiries but attributed it to market pressures on certain operators rather than political changes.

Craig Kucera asked for specifics on the recent debt repayments, particularly whether the swapped portion of the Rabobank facility was paid down. He also inquired if the current challenging farming environment was creating more opportunities for the company's FPI loan program.

Answer

CFO Susan Landi and Executive Luca Fabbri clarified that a significant portion of the Rabo loan was repaid, leaving a balance of approximately $11.8 million, and the interest rate swap was amended to cover this entire remaining amount at an effective rate of 3.81%. Executive Chairman Paul Pittman confirmed that they are seeing more lending opportunities and are 'completely open for business' for well-collateralized, short-term loans at attractive spreads.

Craig Kucera of Lucid Capital Markets sought clarification on the Greenwood Boulevard transaction, asking about final occupancy, rent changes for the new and existing tenants, and the performance of key Sunbelt markets like Phoenix.

Answer

Executive Anthony Maretic confirmed that Greenwood Boulevard will return to 100% occupancy by year-end after a temporary dip, significantly extending the property's weighted average lease term. CEO James Farrar noted that the new tenant's rent will initially be lower but will ramp up to exceed the prior rate. Both executives highlighted the strength of the Phoenix market, which accounted for the majority of the quarter's leasing activity and drove strong positive cash releasing spreads.

Craig Kucera asked for clarification on the Greenwood Boulevard transaction regarding final vacancy and rent changes, and sought commentary on the performance of top Sun Belt markets, particularly Phoenix.

Answer

Executive Anthony Maretic clarified that the Greenwood Boulevard property will return to 100% occupancy by year-end after a temporary dip, significantly extending the property's weighted average lease term. CEO James Farrar added that rents for the new tenant will initially dip but then rise above the prior rate. Both executives affirmed the strength of Sun Belt markets, with Maretic noting that the bulk of the quarter's 144,000 square feet of leasing occurred in Phoenix, driving strong positive cash rent spreads.

Craig Kucera asked about the buyer of Superior Pointe and their intentions for the property, whether the company is contemplating any lender transfers for maturing 2025 loans, the timing for when signed-but-not-commenced leases will begin paying rent, and the potential economics of the St. Petersburg redevelopment project.

Answer

CEO James Farrar stated the Superior Pointe buyer was a family office intending to invest in the property and maintain it as an office. Executive Anthony Maretic confirmed that guidance does not assume any dispositions related to the two loans maturing in Q4 2025 and that discussions are underway. Maretic also noted that rent commencement for the 122,000 square feet of signed leases is spread evenly throughout 2025. Regarding St. Petersburg, Farrar explained the project is structured as a partnership with an experienced developer and is not factored into 2025 guidance, adding that it's too early to discuss project economics.

Craig Kucera inquired about the timing of the remaining occupancy gains expected in 2025, the potential monetization strategy for the City Center redevelopment, and the company's plans for handling 2025 debt maturities, including the potential use of Block 83 for liquidity.

Answer

CFO Anthony Maretic stated the balance of signed leases would commence in early 2025. CEO James Farrar detailed the City Center strategy, which involves contributing the land into a partnership with a developer to participate in the upside from condo sales without significant cash outlay. Regarding liquidity, Maretic confirmed they are exploring financing options for the unencumbered Block 83 asset. Farrar added that the company has a one-year extension option on its operating line, focusing efforts on the two property loans maturing in Q4 2025.