Farmland Partners' Q2 2025: Key Contradictions in Capital Strategy, Acquisitions, and California Farmlands

Dividend and capital deployment strategy, acquisition strategy and focus, California farmlands and water issues, disposition strategy and capital allocation, variable payment dynamics are the key contradictions discussed in Farmland Partners' latest 2025Q2 earnings call.



Asset Dispositions and Revenue Impact:
- Farmland Partners Inc. disposed of $81.6 million in assets in Q2, resulting in a net gain on sale of $25 million.
- The dispositions were primarily in the High Plains and Illinois, as part of a long-term strategy to exit the High Plains market and focus on the U.S. Midwest, particularly Illinois.
- The decisions were driven by long-term water concerns in Colorado and an aim to concentrate the portfolio in regions with better long-term appreciation potential.

Debt Reduction and Financial Performance:
- The company reduced its debt significantly, leading to $2.8 million decrease in interest expense during the quarter and $5.2 million year-to-date.
- This reduction contributed to an increase in net income and AFFO for the quarter.
- The debt reduction was part of a strategic effort to improve financial stability and lower interest costs.

Impairment Charges and Farm Value Adjustments:
- Farmland Partners took a $16.8 million impairment on four California farms, primarily impacting two specific farms.
- The impairments were due to regulatory water access challenges in California and long-term crop production issues in specialty crops like pistachios and walnuts.
- The company acknowledged the long-term perspective but realized the need to adjust farm values based on changing conditions.

Share Repurchases and Capital Allocation:
- Farmland Partners repurchased approximately 2.3 million shares in Q2, representing 5% of fully diluted shares at an average price of $11.24.
- The repurchases were funded by the proceeds from asset sales and were part of a strategy to create value for shareholders.
- The company is focusing on capital deployment options that maximize shareholder returns, including stock repurchases and debt reduction, ahead of potential acquisition opportunities.