Stephen Massocca

Stephen Massocca asked about the drivers behind the 2026 guidance, specifically inquiring about the proportion of variable rent changes attributable to asset sales versus farm revenue outlook. He also questioned the components of the expected year-over-year decline in G&A, including the impact of the Murray Wise sale and loan portfolio expectations, and whether the 2026 G&A figure represents a sustainable run rate. Additionally, he sought insight into the disposition runway, its dependence on the California market, and the potential impact of California asset sales on fixed versus variable farm rents.

Answer

President and CEO Luca Fabbri explained that the variable rent change is due to both asset dispositions and a cautious forecast for Q4 2026, given unknown crop yields and pricing. CFO Susan Landi clarified that the majority of the variable rent decrease relates to 2025 dispositions. Executive Chairman Paul Pittman stated that the Murray Wise sale significantly reduced G&A, along with other cost reductions, and confirmed the 2026 G&A is a sustainable run rate. Regarding dispositions, Mr. Pittman noted that the California market is open but pricing isn't great, and they plan to gradually liquidate most California assets, with a greater impact on variable rent. He added that assets in other states might be sold for efficiency, and Illinois assets are for sale if top dollar is offered.

Stephen Massocca from B. Riley inquired about the drivers behind the 2026 guidance, specifically asking about the proportion of asset sales versus farm revenue changes impacting variable rent, the components of the expected year-over-year decline in G&A, and the long-term sustainability of the G&A run rate. He also questioned the disposition strategy, particularly regarding the California market and the saleability of other portfolio assets, and the potential impact of California asset sales on fixed versus variable farm rents.

Answer

President and CEO Luca Fabbri and CFO Susan Landi clarified that the decrease in variable rent is primarily due to 2025 dispositions, with a more cautious forecast for 2026 variable payments. Executive Chairman Paul Pittman explained that the G&A reduction is largely due to the sale of Murray Wise and other cost efficiencies, confirming the 2026 G&A number is a sustainable run rate. Pittman also stated that all portfolio assets are saleable, noting that the California market is open but with less favorable pricing, and the company plans to gradually liquidate most California holdings while maintaining core Illinois assets. He added that California asset sales would have a greater impact on variable rent.