Gladstone Land Corporation · NASDAQ:LAND
Gladstone Land — IPO Roadshow (November 2018)
30 slides from Gladstone Land's IPO roadshow presentation, Nov 6, 2018
Slide 1: Series B Cumulative Redeemable Preferred Stock Offering
Filed pursuant to Rule 433 Registration Statement No. 333-217042 A Farmland Real Estate Investment Trust $150,000,000 Series B Cumulative Redeemable Preferred Stock Offering FOR INTERNAL BROKER DEALER / RIA USE ONLY – NOAs of August 8, 2018
Slide 2: Legal Disclaimers
Legal Disclaimers Estimates: This presentation contains industry and market data, forecasts, and projections that are based on internal data and estimates, independent industry publications, reports by market research firms, or other published independent sources. We believe these data to be reliabl
Slide 3: Risk Factors
Risk Factors Please consult the prospectus supplement for this offering for a recitation of the risk factors of this offering. If any of the risks contained in or incorporated by reference into the prospectus supplement or the accompanying prospectus develop into actual events, our business, financi
Slide 4: Risk Factors (cont.)
Risk Factors (cont.) ? Holders of the Shares will be subject to inflation risk.? An investment in the Shares bears interest rate risk.? Holders of the Shares will bear reinvestment risk.? Holders of Shares will have extremely limited voting rights. ? Our management will have broad discretion in the
Slide 5: Offering Summary
Offering Summary • Up to $150 million Series B Preferred Stock offering of a public REIT Offering - The Series B Preferred Stock (the “Shares”) will rank senior to Gladstone Land Corporation’s (the “Company” or “we”) Common Stock, which has traded on NASDAQ under the ticker “LAND” since its 2013 IPO
Slide 6: Investment Features
Investment Features • The Company already owns a portfolio of 79 farms with more than 67,000 acres Diversified across 9 states valued at approximately $560 million, as of June 30, 2018 Portfolio - Most farms have been farmed for decades, and all farms have their own water sources • The prices of pro
Slide 7: Gladstone Land Overview
Gladstone Land Overview farmers, Owns farmland primarily and onfarm a triple -related -net basis, facilities meaning leasedthe to farmer high-quality pays rent, insurance, maintenance, and taxes states, As of June valued 30, at 2018, approximately we own 79 $ farms 560 million. with 67,060 99.8%tota
Slide 8: Three Areas of Farming
Three Areas of Farming Primary Focus: Fresh Produce The basic thesis is our belief that farmland growing fresh produce (e.g., fruits and vegetables) and permanent crops (e.g., nuts and blueberries) is a superior Secondary Focus: Nuts investment over land growing commodity crops (e.g., corn, wheat, a
Slide 9: U.S. Farmland: Decreasing Supply, Increasing Demand
U.S. Farmland: Decreasing Supply, Increasing Demand ? As available farmland to feed the world’s growing population continues to decline, we believe U.S. cropland will steadily appreciate in value? Further, we believe the amount of available farmland will continue to decrease? Every year, we believe
Slide 10: Investment Focus
Investment Focus ? We focus on acquiring high-value farmland that we believe will generate above-average revenue and profits? We invest in farmland that has the following characteristics: ? Adequate and clean water supply with fertile soil that is rich in nutrients ? Excellent weather combined with
Slide 11: Investment Focus (continued)
Investment Focus (continued) ? While we invest in farmland growing a variety of crop types, our primary focusisfarmlandgrowing freshproduce ? We view this type of farmland as the most productive (in terms of revenue per acre), the most profitable for farmers, and earns the highest rents for landlord
Slide 12: Investment Focus – Summary
Investment Focus – Summary ? We seek to acquire high-value farmland and farm-related facilities that we lease to corporate and independent farmers, primarily on a triple-net lease basis ? Property Types: High-value cropland with on-site water sources? Locations: Regions with established rental marke
Slide 13: Geographic Focus & Diversity
Geographic Focus & Diversity Total # of # of State Acres Farms Parcels Colorado 31,450 10 84 Florida 16,610 21 97 California 8,241 29 84 Arizona 6,280 6 23 Number of farms owned in a Nebraska 2,559 2 8 # Washington 746 1 3 growing region Michigan 446 5 9 Areas of geographic focus Oregon 418 3 8 Glad
Slide 14: Selected Properties
Selected Properties Palm City, Florida Oxnard, California Watsonville, California Snap Peas Strawberries Raspberries Coalinga, California Arvin, California Okeechobee, Florida Pistachios Almond Trees Cabbage 13
Slide 15: Underwriting Process
Underwriting Process ? Dual-focused underwriting process for each new investment, leveraging our management team’s extensive experience in credit underwriting and knowledge of farmland Due Diligence on the Farm Due Diligence on the Tenant Farm appraisal on each property by an Detailed underwriting o
Slide 16: Growth Opportunity
Growth Opportunity U.S. Farm Ownership: A Fragmented Industry1 We Target Family-Owned Farms ? Target Purchase Price: $2 – $50M (relatively small for most institutions) 13% ? Offer sale-leaseback opportunities to allow the seller to continue farming the land Family Ownership? Able to offer shares of
Slide 17: Company Performance – Portfolio Growth
Company Performance – Portfolio Growth ? Since our IPO of common stock in 2013, we have purchased over $490 million of new farm assets LAND Portfolio Growth $550,000 70,000 65,000 $500,000 60,000 $450,000 55,000 $400,000 50,000 (000s) $350,000 45,000 $300,000 40,000 Value 35,000 Acreage $250,000 30,
Slide 18: Company Performance – Earnings Growth
Company Performance – Earnings Growth ? Consistent upward trend in operating revenues since our IPO (revenues have grown by a multiple of 6.6x) and increases in both Adjusted Funds from Operations (AFFO)(1) and AFFO per Share(1) $30,000 $0.60 $25,000 (000s) $0.50 $20,000 Share AFFO $0.40 and $15,000
Slide 19: Sources of Debt
Sources of Debt1 Amount 2 3 Facility Maturity Interest Rate ($M) • $215.3mm Notes Payable: • Notes Payable: 3.36%; July 2028 fixed for 8.2 years $290.3 • $75mm Revolving Line of Credit: • RLOC: Variable (3-April 2024 month LIBOR + 2.25%) 3.37%; $125.0 May 2022 fixed for 3.8 years 4 3.62%; $92.1 Octo
Slide 20: Lease Expirations and Debt Maturities
Lease Expirations and Debt Maturities Lease Expirations (as of 6/30/18)1 38.0% $20.0 40% Base GAAP 27.4% (mm) 30% 19.4% Rents $10.0 20% 7.4% Annualized GAAP Revenue 3.6% 1.7% 2.6% 10% Annualized $0.0 0% 2018 2019 2020 2021 2022 2023 2024+ Annualized GAAP Revenue % of Annualized Base Rent # of Expiri
Slide 21: Valuation of Farms
Valuation of Farms ? While most REITs do not disclose the fair value of their properties, we provide updated valuations of our farms in our quarterly filings with the SEC to show the estimated fair value of our farmland portfolio? At least once every three years, we’ll generally have each of our far
Slide 22: Use of Leverage
Use of Leverage $600 70% 60%Value) $500 Fair (mm) 50% $400 Portfolio Value 40% Total Debt $300 Leverageover and 30% Debt $200 of Portfolio 20% Value $100 10% Fair $0 0% IPO* 2013 2014 2015 2016 2017 6/30/2018 As of December 31 Total Portfolio Fair Value** Total Debt Fair Value*** Leverage Notes: * T
Slide 23: Gladstone Land: Executive Management
Gladstone Land: Executive Management David Gladstone – Chairman & CEO • Chairman and CEO since inception • Former owner of Coastal Berry, one of the largest strawberry farm operations in CA (1997-2004) • Former Chairman of American Capital (NASDAQ: ACAS) (1997-2001) • Former Chairman and CEO of Alli
Slide 24: Gladstone Land: Deal Team
Gladstone Land: Deal Team Bill Reiman – Managing Director (West Coast) • Fifth-generation farmer focused on coastal California • Built and managed a $25M strawberry and raspberry farming operation • Recent Chairman of California Strawberry Commission Ventura County Agriculture Association Bill Frisb
Slide 25: Why Invest in Gladstone Land's Series B Preferred Stock
Why Invest in Gladstone Land’s Series B Preferred Stock Goal to Provide Cash ?Our goal is a cash distribution rate per share of $0.125 per month, or $1.50 Returns per year and is paid in preference to the common stock distributions ?Management has more than 100 combined years of industry experience
Slide 26: Appendix
Appendix 25
Slide 27: Adjusted Funds from Operations (AFFO)
Adjusted Funds from Operations (AFFO) ? Funds From Operations (FFO): The National Association of Real Estate Investment Trusts (NAREIT) developed FFO as a relative non-GAAP supplemental measure of operating performance of an equity REIT in order to recognize that income-producing real estate histori
Slide 28: AFFO (continued)
AFFO (continued) ?A reconciliation of AFFO to its most directly-comparable GAAP measure, net income, for the most recently-completed period is presented below: For the (USD 000s, except per share data) Quarter Ended 6/30/2018 6/30/2017 Net income $ (1,852) $ 255 Plus: Real estate and intangible depr
Slide 29: Net Asset Value (NAV)
Net Asset Value (NAV) ? NetAssetValue (NAV): Pursuant to a valuation policy approved by our board of directors, our valuation team, with oversight from the chief valuation officer, provides recommendations of value for our properties to our board of directors, who then review and approve the fair va
Slide 30: NAV (continued)
NAV (continued) ?A reconciliation of NAV to total equity, which the Company believes is the most directly-comparable GAAP measure, is provided below: (USD 000s, except per share data) As of June 30, 2018 Total equity per balance sheet $135,151 Fair value adjustment for long-term assets: Less: net co