Farmland Partners Inc. (FPI)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 delivered strong GAAP results driven by $24.2M gain on asset sales, offset by $16.8M California impairments; GAAP diluted EPS was $0.14 and total operating revenues were $9.96M .
• AFFO per share was $0.03 and Adjusted EBITDAre was $4.47M; the company repurchased ~2.10M shares at $11.19 and continued deleveraging, ending with $193.4M total debt and $211.1M of liquidity .
• FY 2025 AFFO per share guidance was maintained at $0.28–$0.34; management highlighted mix changes (lower fixed rent from dispositions, higher loan program and variable payments) and reduced interest expense .
• Near-term catalysts: continued dispositions (safe harbor target of up to seven transactions), potential portfolio pruning in California, and ongoing buybacks as capital deployment priority over acquisitions .

What Went Well and What Went Wrong

What Went Well

• Asset sales monetized appreciation: 32 Q2 property dispositions for $71.6M with $24.2M gain; YTD 34 dispositions for ~$81.6M with $25.0M gain, supporting GAAP EPS and balance sheet strength .
• Capital allocation discipline: Repurchased 2,099,756 shares at $11.19 in Q2; subsequent 181,989 shares at $11.48; management emphasized undervaluation and buybacks over acquisitions .
• Lower interest expense and higher interest income: Debt reduction and expanding loan program improved AFFO drivers; lines of credit repaid by $23M in July and undrawn capacity ~$160M .

Management quotes:

• “We are redeploying sale proceeds to repurchase our undervalued stock and reduce high-cost debt” .
• “Buying back stock is, in most cases, more effective… we’re just not very acquisitive” .
• “ASFO was positively impacted by significantly lower interest expense… and higher interest income due to increased activity under the FPI loan program” .

What Went Wrong

• California impairments: Recorded $16.8M impairment largely on pistachio and walnut farms due to SGMA-related water constraints and crop dynamics; two farms were ~50% write-downs .
• Revenue headwind from dispositions: Total operating revenues fell 13% YoY to $9.96M; NOI declined to $6.89M, reflecting portfolio size reductions .
• Legal/accounting costs: Guidance raised ~$300K at both low/high ends due to a tenant dispute in Louisiana likely to be settled .

Financial Results

Revenue breakdown:

Margins (S&P Global):

Values retrieved from S&P Global.*

KPIs and balance sheet:

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “In the first half of 2025, we realized meaningful gains on over $80 million of farm sales—clear evidence of asset appreciation and value creation” — Luca Fabbri, CEO .
• “We are much, much more concentrated on the U.S. Midwest, Illinois in particular… safer and more stable portfolio” — Paul Pittman, Executive Chairman .
• “On one [California] farm… a little over 50% [impairment]… we wanted to bite the bullet once” — Luca Fabbri .
• “We had undrawn capacity on the lines of credit of approximately $160 million… repaid our lines of credit in full with payments totaling $23 million in early July” — Susan Landi, CFO .
• “There will be almost no chance that we convert [preferred units] into shares… 99% probability that that is not going to be converted” — Paul Pittman .

Q&A Highlights

• Dispositions capacity/cadence: Operating under REIT “safe harbor” of ~7 transactions in 2025; four remain; special dividend outcome uncertain given GAAP vs tax differences .
• Capital deployment: Buybacks favored; acquisitions only for adjacency/bargains; Midwest provides lower yield but superior long-term appreciation .
• Legal/Accounting guidance: +~$300K due to legacy tenant dispute in Louisiana, likely settled .
• Preferred units: High likelihood of cash payoff (from asset sales or credit lines), not conversion .
• Variable payments: Outlook improved on crop dynamics; no lease restructuring required .
• California strategy: Actively marketing impaired farms; discipline on pricing; SGMA rules drove write-downs .

Estimates Context

S&P Global consensus vs actuals:

Values retrieved from S&P Global.*

Notes:

• FPI’s GAAP diluted EPS for Q2 2025 was $0.14, but S&P’s Primary EPS (normalized) was -$0.013; divergence reflects non-GAAP normalization excluding large gains on asset sales ($24.2M) and impairment charges ($16.8M) recorded in the quarter .

Implications:

• Revenue beat in Q2 reflects stronger other revenue/crop sales and loan program contributions despite rent headwinds from dispositions .
• EPS miss on normalized basis signals estimate models may need to better incorporate asset sale gains/impairments timing and non-recurring items .

Key Takeaways for Investors

• Asset sales remain a material earnings driver; expect continued dispositions under REIT safe harbor and potential further pruning in California, with near-term GAAP EPS sensitive to gains/loss timing .
• Capital allocation is a catalyst: management prioritizes buybacks over acquisitions given perceived undervaluation; this should lower share count and support per-share metrics .
• Balance sheet flexibility: $211.1M liquidity, lower interest expense, and no variable rate exposure (except lines) provide room to manage preferred payoff and opportunistic buybacks .
• California risk addressed: SGMA-driven impairments recognized; listings underway to exit challenged assets; reduces overhang but may limit variable rent upside from permanent crops .
• Loan program is a growing cash flow lever: higher interest income and points amortization (~$2.4M expected in 2025) bolster AFFO, but management will cap portfolio exposure .
• Guidance maintained: FY 2025 AFFO/share $0.28–$0.34 with mix shifting—lower fixed rents, higher loan program/variable payments, lower interest expense; watch incremental legal costs .
• Trading setup: headlines on dispositions/buybacks and any clarity on preferred payoff can drive the stock; normalized EPS may remain volatile—focus on AFFO trajectory and per-share improvements .