Executive Summary

Q1 2025 GAAP EPS of $0.25 materially beat S&P Global consensus (-$0.16); total operating revenues of $16.8M were below consensus ($17.3M), while EBITDA outperformed ($15.4M vs $12.9M). The EPS beat was driven by gains on farm dispositions and a $2.4M lease termination fee, not core base rents. Values retrieved from S&P Global.*
AFFO fell to $2.0M ($0.056/share) from $5.1M ($0.143/share) YoY as fixed base cash rents declined by $5.7M and vacancies/direct-operated/non‑accrual assets weighed on costs; participation rents were modest in Q1 with the majority expected in Q4 2025 .
Management tightened its lease-structure pivot: expected FY2025 fixed base rent decline widened from ~$13M (Q4 guide) to ~$17M, with 60–70% of recovery via participation rent now expected in Q4 2025 and the remainder in 2H 2026 .
Balance sheet remains liquid with access to >$180M, nearly all debt fixed; monthly dividend maintained at $0.0467 per share for Q2 2025 (annualized $0.5604) .

What Went Well and What Went Wrong

What Went Well

Significant monetization: Sold seven farms (8,189 acres) for $64.5M, realizing ~$15.7M net gain; drove GAAP net income increase YoY and supported liquidity .
Operating resilience in financing costs: ~100% fixed-rate debt, weighted average ~3.4% with minimal earnings sensitivity to higher interest rates; interest patronage of ~$1.7M reduced Farm Credit borrowing rates by ~101 bps .
Improving permanent crop price backdrop: “Almond prices have risen significantly year-over-year and pistachios remained stable but up slightly,” underpinning the participation rent strategy’s Q4 skew .

What Went Wrong

Core cash rents and AFFO pressure: Fixed base cash rents fell by $5.7M YoY; AFFO dropped to $2.0M ($0.056/share) from $5.1M ($0.143/share) YoY; five leases amended lowered NOI by ~$236k annually; vacancies/direct-operated/non‑accrual increased property taxes/legal costs .
Elevated portfolio friction: 10 properties (14 farms) either vacant, direct-operated, or on non-accrual; management is pursuing leases/sales but expects resolution by year-end, indicating continued near-term cash flow drag .
Revenue miss vs consensus: Total operating revenues were $16.8M, below S&P Global consensus of $17.3M, reflecting reduced fixed base rents and asset sales despite a $465k participation rent uplift and $2.4M termination fee . Values retrieved from S&P Global.*

Financial Results

Core Comparisons (oldest → newest)

Metric	Q1 2024	Q4 2024	Q1 2025
Total operating revenues ($USD Thousands)	20,252	21,096	16,804
Net income ($USD Thousands)	13,567	539	15,108
Net income attributable to common ($USD Thousands)	7,449	(5,463)	9,106
Diluted EPS ($USD)	0.208	(0.151)	0.252
AFFO ($USD Thousands)	5,130	3,362	2,035
AFFO per share ($USD)	0.143	0.093	0.056
Cash flows from operations ($USD Thousands)	3,420	11,582	4,467
Occupancy rate (%)	98.9%	96.2%	95.9%

Revenue vs Estimates (S&P Global)

Metric	Estimate	Actual	Beat/Miss
GAAP EPS ($)	-0.163	0.25	Bold beat*
Total operating revenues ($USD)	17,297,000	16,804,000	Miss*
EBITDA ($USD)	12,933,670	15,411,000	Bold beat*

Values retrieved from S&P Global.*

Selected Items Driving Q1

Item	Q1 2025 Amount	Context
Fixed base cash rent decrease	$5.7M	Lease restructurings and asset sales reduced fixed cash rents
Participation rent increase	$465k	Primarily wine grape sales
Lease termination fee	$2.4M	Received from outgoing tenant on three almond farms
Gains on dispositions	$15.410M	Net gains on property sales boosted GAAP results

KPIs

KPI	Q1 2024	Q1 2025	Change
Farms owned (#)	168	150	(18)
Acres owned	111,836	103,001	(8,835)
Water assets (acre-feet)	49,076	55,350	+6,274
Cash distributions declared per common share ($)	0.140	0.140	Flat

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Fixed base cash rent decline	FY 2025	~$13M decline (shift to participation)	~$17M decline; ~$4–5M/quarter impact	Lowered (more negative)
Participation rent recognition timing	FY 2025–FY 2026	Majority in 2H 2025; 75–85% by 2H 2025; remainder 2H 2026	60–70% in 2025 (Q4-weighted); remainder in 2026 2H	Lowered near-term weighting
Monthly dividend ($/share)	Q2 2025	$0.0467 (Q4 notice for Q1)	$0.0467 for Apr–Jun 2025	Maintained
Asset sales cadence	2025	Ongoing exploration	No Q2 contracts yet; listed assets; opportunistic	Maintained cautious stance

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024, Q4 2024)	Current Period (Q1 2025)	Trend
Shift to participation leases	Q3: 4 leases; Q4: 5 farms; rationale: lower permanent crop prices/inputs, back-half recognition	6 leases adjusted; NOI down ~$236k; majority of rent in Q4 2025	Increasing reliance
Permanent crop pricing	Depressed; early stabilization; pistachio yields strong	Almond prices rising; pistachios stable/up; monitoring tariffs	Improving
Water assets/security	Water purchases; dual source focus	55,350 acre-feet; considering adding; wet year supports supply	Stable/increasing
Interest rates/cost of capital	Headwind to acquisitions; cautious stance	~100% fixed-rate debt; WAC ~3.41% for 3.4 yrs; remain cautious	Persistent headwind
Vacant/direct-operated/non‑accrual	Q3: 20 farms impacted	10 properties (14 farms) impacted; working to resolve by YE	Improving vs Q3 but still elevated
Dividends	Hold flat pending 2025 harvest visibility	Q2 dividend maintained; yield context shared	Maintained
Asset sales	Q3: blueberry sale agreements; Q4: 12 farm sales in 2024	Q1: seven-farm sale at gain; no Q2 contracts yet	Continuing selectively
NAV publication	Q4: discontinued voluntary quarterly NAV	No NAV updates in Q1	Discontinued

Management Commentary

“Our earnings for 2025 will be more reliant upon participation rents than in years past, with the large majority expected to come in the fourth quarter.” — David Gladstone, CEO
“Adjusted FFO was approximately $2 million or $0.06 per share… fixed base cash rents decreased by about $5.7 million… offset by a $2.4 million termination fee and ~$465k participation rents.” — Lewis Parrish, CFO
“Including availability on our lines of credit and other undrawn notes, we currently have access to over $180 million of capital… about $40 million of cash on hand… over 99.9% of our borrowings are at fixed rates with a weighted average rate of 3.41%.” — Lewis Parrish, CFO
“We intend this to be a temporary change… revert these leases back to standard leases with fixed base rents as early as the 2026 crop year or sell some of these farms.” — David Gladstone, CEO

Q&A Highlights

Participation rent timing and magnitude: Management expects to recover ~$17M fixed rent decline via participation rents and/or insurance; ~60–70% recognized in 2025, remainder in 2H 2026 .
Termination fee specifics: $2.4M fee related to three almond farms; now vacant; exploring leasing/sale options .
Asset sale pipeline: Some farms listed; no Q2 contracts yet; opportunistic approach given market conditions .
Capital allocation: Despite share price levels, management prioritizes liquidity over buybacks given operating uncertainty; dividend remains a priority .
Preferred maturity: ~$60M Series D term preferred due Jan 2026; evaluating farm sales vs refinancing; perpetual 8% option exists but not preferred .
Vacancies cost profile: Two open-ground properties with low carry (primarily taxes); three almond farms at end-of-life; evaluating replanting or water-rights strategies .

Estimates Context

Q1 2025 vs S&P Global consensus: EPS $0.25 vs -$0.16 (bold beat); revenues $16.8M vs $17.3M (miss); EBITDA $15.4M vs $12.9M (bold beat). Values retrieved from S&P Global.*
Why the beat/miss: EPS/EBITDA beat reflect non-recurring gains on dispositions ($15.4M net) and a $2.4M termination fee that boosted “Other income, net,” while base rent reductions and asset sales pressured revenues; participation rents were modest in Q1 and are Q4‑weighted .
Implications: Street models likely need to lower interim 1H–3Q 2025 rent/AFFO run‑rates, raise Q4 participation income assumptions, and incorporate vacancy resolution cadence; dividend maintenance hinges on back‑half cash generation .

Key Takeaways for Investors

2025 earnings skew heavily to Q4 due to lease restructurings; near-term AFFO run-rate is subdued until participation rents materialize .
The GAAP EPS/EBITDA beat is not indicative of core rent health; it was driven by gains on asset sales and a termination fee; focus on AFFO and cash rent trajectory .
Permanent crop fundamentals (almonds/pistachios) are improving; if sustained, this supports participation rent outcomes and potential reversion to fixed base leases in 2026 .
Liquidity and fixed-rate debt profile provide downside protection in a high-rate environment; dividend held flat with reassessment post-harvest .
Watch catalysts: Q2/Q3 lease-up of vacant assets, any incremental asset sales, tariff impacts on nut exports, and water asset additions (particularly in California) .
Guidance tightened: fixed base rent decline widened to ~$17M for 2025; participation recovery shifted to 60–70% in 2025, remainder in 2026; adjust models accordingly .
Risk management: Crop insurance expected to cover downside on direct-operated/participation structures; however, timing mismatches may strain interim cash metrics .

Notes: Non‑GAAP definitions and reconciliations (FFO/CFFO/AFFO) are provided in company materials . Conference call logistics and additional company background are available in the filings .

GLADSTONE LAND Corp (LAND)·Q1 2025 Earnings Summary