Farmland Partners 2026 Q2 Earnings Call
Review the key takeaways and the transcript of this earnings call.
- Farmland Partners, Inc. reported net income of $3.1 million, or $0.07 per share, for Q2 2026, down from $7.8 million, or $0.15 per share, in Q2 2025.
- Adjusted funds from operations (AFFO) for Q2 2026 was $1.7 million, or $0.04 per share, compared to $1.3 million, or $0.03 per share, in Q2 2025.
- For the six months ended June 30, 2026, net income was $3.8 million, or $0.08 per share, versus $9.9 million, or $0.18 per share, for the same period in 2025.
- Six-month AFFO was $3.8 million, or $0.09 per share, compared to $3.6 million, or $0.08 per share, in 2025.
- Revenue increases were driven by higher interest income from loans, increased amortization of points, and higher oil and gas royalties, partially offset by lower rental income due to prior year asset dispositions.
- Operating expenses declined year over year due to property dispositions, lower G&A and legal fees, and reduced property impairment charges, partially offset by increased credit loss provisions.
- The decrease in net income was primarily due to fewer property dispositions in the current year compared to the prior year.
- The company had $122 million of undrawn capacity on lines of credit at the end of Q2 2026, repaid $8 million during the quarter, and saw the average loan interest rate decrease from 5.64% to 5.25%.
- A $3.6 million gain on a property disposition was recognized in Illinois related to a solar development farm sale.
- Management described Q2 2026 as a strong but relatively uneventful quarter with performance as expected.
- The company is evaluating asset dispositions, particularly non-core assets in California, and is monitoring agricultural market conditions and tenant financial health.
- Management is holding back on lease renewals due to challenging financial conditions among tenants but expects a flat to slightly up lease renewal year with cost of living adjustments.
- The loan program is considered relatively high risk, with loans to distressed borrowers at high interest rates, prompting prudent reserve building for credit losses.
- Legal expenses of $312,000 in Q2 2026 were mostly audit and tax fees; litigation expenses were minimal at about $25,000.
- The company’s buyback program is driven by stock price and cash availability, with a preference to fund buybacks from disposition proceeds rather than long-term borrowing due to borrowing costs.
- Management noted that the agricultural sector, especially in California, faces severe challenges including water availability, labor costs, and unfavorable policies, leading to a bearish long-term outlook on California assets.
- The company has less exposure to California farmland than many peers and is gradually reducing that exposure in favor of investments in the Midwest.
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Transcript
Preview the first fifteen paragraphs, organized by speaker.
I will now hand the conference over to Luca Fabbri, President and Chief Executive Officer. Luca, please go ahead. Thank you, Erica.
Good morning and welcome to Farmland Partners' second quarter 2026 earnings conference call and webcast. We fully appreciate your taking the time to join us for these calls because we see them as a very important opportunity to share with you our thinking and our strategy in a format less formal and more interactive than public filings and press releases. I will now turn over the call to our General Counsel, Christine Garrison, for some customary preliminary remarks.
Christine. Thank you, Luca. Thank you to everyone on the call.
The press release announcing our second quarter earnings was distributed after market close yesterday. The supplemental package has been posted to the investor relations section of our website under the subheader Events and Presentations. For those who listen to the recording of this presentation, we remind you that the remarks made herein are as of today, July 30th, 2026, and will not be updated subsequent to this call. During this call, we will make forward-looking statements, including statements related to the future performance of our portfolio, our identified and potential acquisitions and dispositions, impact of acquisitions, dispositions, and financing activities, business development opportunities, as well as comments on our outlook for our business rents and the broader agricultural markets. We will also discuss certain non-GAAP financial measures, including net operating income, AFFO, adjusted AFFO, EBITDAre, and adjusted EBITDAre.
Definitions of these non-GAAP measures, as well as reconciliations to the most comparable GAAP measures, are included in the company's press release announcing second quarter 2026 earnings, which is available on our website, farmlandpartners.com, and is furnished as an exhibit to our current report on 8-K dated July 29th, 2026. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review the risk factors discussed in our press release distributed yesterday and in documents we've filed with or furnished to the SEC. I would now like to turn the call to our Executive Chairman, Paul Pittman.
Paul. Thank you, Christine. This was actually a pretty good quarter for us and frankly, a very mundane quarter.
No real surprising events. Everything's kind of performing as expected, and as projected. You'll hear me back at the Q&A, but I'm going to turn it over to Luca, so we don't end up repeating the same things.
Thank you, Paul. This was a pretty strong quarter performance-wise to the extent that we actually even marginally adjusted guidance upwards on the low end for the remainder of the year for AFFO. As Paul said, relatively uneventful quarter as typically Q2 and Q3 of the year are, in the middle of the year. We continue evaluating asset dispositions through the end of the year, especially non-core assets like in California. We're also actively monitoring the conditions in the agriculture world as far as timing of our lease renewals. We have held back so far in pushing lease renewals for the next year because financial conditions are not ideal, to say the least, among our tenants. We do have very strong tenants in our pool. This is not the first year of relatively middling performance in their financials.
There is nothing particularly new that we expect, but we are hoping for a little bit of better news before we kick off the lease renewal cycle in high end gear. With that, I will now turn the call over to our CFO, Susan Landi, for her overview of the company's financial performance.
Susan. Thank you, Luca. I'm going to cover a few items today, including the summary of the three and six months ended June 30, 2026, a review of our capital structure, and updated guidance for 2026.
I'll be referring to the supplemental package, which is available in the investor relations section of our website under the subheader Events and Presentations. First, I want to share a few metrics that appear on page two. For the three months ended June 30, 2026, net income was $3.1 million or $0.07 per share available to common stockholders versus $7.8 million or $0.15 per share available to common stockholders for the same period in 2025. AFFO was $1.7 million or $0.04 per weighted average share, compared to $1.3 million or $0.03 per weighted average share for the same period in 2025.
For the six months ended June 30, 2026, net income was $3.8 million or $0.08 a share available to common stockholders versus $9.9 million or $0.18 a share available to common stockholders for the same period in 2025. AFFO was $3.8 million or $0.09 per weighted average share compared to $3.6 million and $0.08 per weighted average share for the same period of 2025. Page five shows a more comprehensive look at the main drivers of these changes year-over-year. On the revenue side, we were positively impacted by higher interest income, which is due to higher average balance on the loans under the FPI loan program and financing receivables, an increase in the amortization of points, and higher proceeds from oil and gas royalties.
These increases were partially offset by lower rental income due to asset dispositions occurring in the prior year. Operating expenses declined on a quarter-to-date and year-to-date basis over prior year. Some of these declines are to be expected with the property dispositions that occurred in the prior year, but there were also other reductions to G&A and legal fees, including a reduction in property impairment charges. These declines were partially offset by an increase in the provision for credit loss allowance related to loans under the FPI loan program. Overall, we saw a reduction in net income and EPS for both quarter-to-date and a year-to-date basis. The primary driver for the reduction relates to a decrease in the net gain on disposition of assets as a result of fewer property dispositions in the current year versus the prior year.
AFFO per weighted average share is up by a penny for the three and six months ended period of the current year. On Page 12, there are a few capital structure items that I'd like to point out. The first is that we had undrawn capacity on the lines of credit of approximately $122 million at the end of Q2 2026. There were repayments of $8 million during the quarter, but no borrowings. We had one MetLife loan with a rate reset occurring during the second quarter. In addition, one loan was extended by one year. The average rate on these loans decreased from 5.64% to 5.25%. Moving on to Page 15, it'll show you the updated outlook for 2026. The assumptions are listed at the bottom of the page. On the revenue side, changes from the April guidance include an increase in our outlook on variable lease payments.
On the expense side, changes from the April guidance include increases as a result of additional provision for credit loss allowances on loans receivable, and an increase in impairment related to updated market valuations in connection with one of our West Coast properties. These were partially offset by a $3.6 million gain on a property disposition. The forecasted range of AFFO is $13.5 million-$15.3 million or $0.31-$0.35 per share, which is an increase from the prior quarter on the low end of the range. The high end of the range remained unchanged. This summarizes where we stand today. We will keep you updated as we progress through the year. This does wrap up our comments for this morning. Thank you all for participating. Operator, you can now begin the Q&A session.
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