Farmland Partners' Q3 2025: Contradictions Emerge on Dividend Strategy, Loan Portfolio, Murray Wise's Impact, and Land/Farmland Strategies

Date of Call: October 30, 2025

Financials Results

• EPS: $0.00 per share (net income $0.5M) for Q3 2025, lower vs. Q3 2024 largely due to deferred gains recognized in 2023 vs. a $0.5M loss in the current quarter; 9M net income $10.4M or $0.18 per share, higher vs. prior year due to gains on dispositions and interest savings.

Guidance:

• AFFO guidance for full-year 2025 updated to $14.5M–$16.6M (or $0.32–$0.36 per share).
• Management expects higher management fees and interest income from an increased loan balance under the FPI loan program.
• Increased impairment expense due to updated West Coast market information partially offsets lower property operating and depreciation expense from dispositions.
• Company plans a special dividend of $0.18–$0.22 per share to be paid January 2026.

Business Commentary:

* Strong Financial Performance and Special Dividend: - Farmland Partners reported AFFO of $2.9 million for Q3 2025, higher than the same period of 2024. - The increase in AFFO was driven by lower interest expense, reduced property operating costs, and increased interest income due to a higher average balance in loans under the FPI loan program. - The company also announced a special dividend of between $0.18 and $0.22 per share, aligning with their commitment to deliver value to shareholders.

• Disposition of Murray Wise Associates:
• Farmland Partners sold its brokerage and farm management subsidiary, Murray Wise Associates, simplifying operations and aligning with strategic goals.
• The sale was beneficial for both shareholders and employees, providing a strong platform for the latter's professional growth.

• Although the sale means a loss of revenue, the company expects it to be negligible in the context of the overall P&L in 2026 due to the cautious projections of the business's performance.

• Series A Preferred Exchange Transaction:

• Farmland Partners exchanged $31 million worth of Series A preferred units for Illinois properties, leading to a 56% appreciation in property value since their initial acquisition 10 years ago.
• This transaction highlights the appreciation potential in farmland assets and aligns with the company's strategy to deliver shareholder value.

• The company plans to use lines of credit to pay off the Series A preferred, with an expected impact on the P&L but positioned to manage the financial implications.

• Impact of China Trade Deal on Agricultural Markets:

• A potential China trade deal involving agricultural commodities was discussed, potentially beneficial for U.S. farmers with increased soybean exports to China.
• While the deal is expected to have a positive impact on exports, its long-term effects on rents and land values are uncertain, as the deal is only for one year.
• The growth in exports is seen as a positive development but may not significantly affect long-term rents or land values due to the short duration of the deal.

Sentiment Analysis:

Overall Tone: Positive

• Management repeatedly described results as "a very strong quarter" and highlighted AFFO improvement (Q3 AFFO $2.9M, $0.07 per share, higher vs. 2024) and 9M net income gains from dispositions ($24.5M gain on 35 property sales). They announced a $0.18–$0.22 special dividend and emphasized debt reduction and interest savings; cautioned some 2025 gains were one-time events.

Q&A:

• Question from Robert Stevenson (Janney Montgomery Scott LLC): When does the '23 farm sale and the retirement of the preferred units close?
  Response: Christine Garrison: The transaction will close December 10, 2025.

• Question from Robert Stevenson (Janney Montgomery Scott LLC): Any additional sales expected in Q4 or are you done for the year after the 23 Farm disposition?
  Response: Paul Pittman: A few small single-digit million transactions may close, but nothing on the scale of the 23 Farm deal is likely.

• Question from Robert Stevenson (Janney Montgomery Scott LLC): Will additional small sales affect the announced special dividend range?
  Response: Paul Pittman: We're likely to stick with the $0.18–$0.22 special dividend range regardless of one additional small transaction.

• Question from Robert Stevenson (Janney Montgomery Scott LLC): What are your plans for the MetLife term loan maturing in March?
  Response: Luca Fabbri: Plan is to renew it, either with MetLife or another lender.

• Question from Robert Stevenson (Janney Montgomery Scott LLC): How does current pricing compare to the loan costing you 5.55%?
  Response: Luca Fabbri: Expect spreads to remain fundamentally consistent; renewal not imminent for a few months.

• Question from Robert Stevenson (Janney Montgomery Scott LLC): How material is the Murray Wise revenue run-rate removal going forward?
  Response: Susan Landi / Luca Fabbri: Auction/brokerage revenues are lumpy; removal is de minimis to overall P&L and negligible for 2026; transaction expected to close ~Nov 15.

• Question from Robert Stevenson (Janney Montgomery Scott LLC): The updated outlook shows increased legal/accounting—what is driving that?
  Response: Paul Pittman: Modest ongoing costs from the 'short and distort' matters plus an unbudgeted local legal dispute in Louisiana.

• Question from Craig Kucera (Lucid Capital Markets, LLC): Will the remaining Series A preferred convert or will you pay it off?
  Response: Paul Pittman: ~99% probability we will pay off the Series A in cash rather than convert, given conversion economics; liquidity in place to do so.

• Question from Craig Kucera (Lucid Capital Markets, LLC): How much did the walnut (Blue Heron) sale accelerate crop sales revenue and cost of goods this quarter?
  Response: Susan Landi: The accelerated recognition was about $0.2 million—immaterial to the quarter overall.

• Question from Craig Kucera (Lucid Capital Markets, LLC): Guidance increased for management fees/interest income despite no net loan funding in Q3—why?
  Response: Paul Pittman: A borrower extended a loan rather than paying it off, increasing projected interest income and management fees.

• Question from John Massocca (B. Riley Securities, Inc.): Any significant maturities in the loan receivables coming in 2026?
  Response: Paul Pittman: The company is gradually shrinking owned farmland but intentionally expanding the high‑yield loan program; will manage maturities and credit exposure prudently.

• Question from John Massocca (B. Riley Securities, Inc.): What is your portfolio's exposure to soybeans?
  Response: Paul Pittman / Luca Fabbri: Roughly 50% by rotation in row‑crop areas (practically ~60% corn/40% soy in a given year); exposure to soybean prices is indirect because most row‑crop leases are fixed cash rent—primary risk is farmer profitability.

• Question from John Massocca (B. Riley Securities, Inc.): Any runway for share buybacks in 4Q or into 2026?
  Response: Luca Fabbri / Paul Pittman: Buybacks remain a tool and are considered opportunistically, but the upcoming special dividend and potential near‑term trading dynamics reduce the likelihood of sizable buybacks immediately.

• Question from Tousley Hyde (Raymond James & Associates, Inc.): As you pare down the portfolio, will long‑term average rent increases (~3–4%) skew?
  Response: Paul Pittman: The average should remain consistent and likely stick close to the Midwest‑dominated nationwide averages as the portfolio becomes more Midwestern.

• Question from Tousley Hyde (Raymond James & Associates, Inc.): Any update on renewable (lease) renewals for this year?
  Response: Paul Pittman: Renewals are largely complete; in the row‑crop region rent rollovers are roughly flat with last year and many renewals were taken as one‑year extensions given the tougher farm economics.

Contradiction Point 1

Dividend and Stock Buyback Strategy

It involves the company's financial strategy, specifically regarding dividends and stock buybacks, which directly impact shareholder returns and investor expectations.

Will you complete any additional sales in Q4, or are you done with this year's sales, including the 23 Farm disposition? - [Robert Stevenson](Janney Montgomery Scott LLC)

2025Q3: We continue to expect that with the proceeds of all 7 transactions including the 23 farm sale that we will do a special dividend. - [Paul Pittman](CEO)

Will you need to pay another special dividend this year if you complete the four transactions? - [Robert Stevenson](Janney Montgomery Scott LLC)

2025Q2: We have not decided exactly the size of the special dividend, but we do expect to do another one to reset the annual ordinary dividend at some point later this year. - [Paul Pittman](CEO)

Contradiction Point 2

Loan Portfolio Expansion and Reduction

It involves the strategic direction of the company's loan portfolio, which could impact financial performance and risk management.

Are there significant maturities expected in loan receivables in 2026? - [John Massocca](B. Riley Securities, Inc.)

2025Q3: Gradually shrinking the loan portfolio due to buybacks or special dividends, but still expanding it because of high current yields. - [Paul Pittman](CEO)

What was the amount of FPI loan points amortized in Q1? What is the amortization schedule for future periods? - [Craig Kucera](Lucid Capital Markets)

2025Q1: We are maintaining high cash flow by shifting investments from property purchases to loans with high interest rates, often around 8% to 10%. - [Paul Pittman](CEO)

Contradiction Point 3

Impact of Murray Wise's Removal

It involves the financial impact of removing Murray Wise, which affects the company's revenue and expense projections.

Is the guidance decrease for items related to Murray Wise's sale running approximately $1 million quarterly? How should we adjust models to reflect the quarterly run rate going forward, excluding Murray Wise from expenses and revenue? - [Susan Landi](CFO)

2025Q3: Revenues are lumpy and the impact of Murray Wise's removal is expected to be negligible in 2026. - [Susan Landi](CFO)

Is there a major factor driving the approximately $300,000 increase in legal and accounting guidance at both ends? - [Robert Stevenson](Janney Montgomery Scott LLC)

2025Q2: We still are expecting that $6 million to $7 million will be the range for ordinary dividends for next year, recognizing that we won't have Murray Wise revenue included. - [Susan Landi](CFO)

Contradiction Point 4

Land Portfolio Strategy

It reflects differences in the company's strategic focus on land acquisitions versus stock buybacks, which could affect future growth and shareholder returns.

Are you expecting additional sales in Q4 beyond the 23 Farm disposition, or are you done with sales for the year? - [Robert Stevenson](Janney Montgomery Scott LLC)

2025Q3: The 23 Farm disposition did not count as the 1 of 7 transactions under the tax law, with a few small transactions in the hopper. Something else could happen, but unlikely to be on the scale of the 23 Farm deal. - [Paul Pittman](CEO)

How do you balance the buyback program with retaining dry powder for land investments in light of macroeconomic uncertainty? - [John Massocca](B. Riley Securities)

2025Q1: We see our stock as a bargain, trading at a 25%-30% discount to our estimate of its worth. With the macroeconomic uncertainty, we are prioritizing stock buybacks rather than land purchases. - [Christine Garrison](General Counsel and Corporate Secretary)

Contradiction Point 5

Farmland Investment Strategy

This contradiction highlights a shift in Farmland Partners' strategic focus regarding their investment in California, which directly impacts their portfolio diversification and potential returns.

Are distressed buyers in the California market signaling a potential market bottom? - [Craig Kucera](Lucid Capital Markets, LLC)

2025Q3: The California market remains dislocated with limited investment from large players. Smaller operators are buying parcels based on 2024's performance. - [Luca Fabbri](CEO)

What is the outlook for net acquisition pricing in 2025 and which regions or crop types are most promising for future deals? - [Rob Stevenson](Janney Montgomery Scott)

2024Q4: California is challenged by water issues, labor, and regulatory concerns, but the company is open to selling assets if approached at fair prices. - [Paul Pittman](CEO)