Thank you, Melissa, for that nice introduction. This is David Gladstone, and this is the quarterly call for Gladstone Land.

Thank you all for calling in today. We appreciate you taking time out of your busy day to listen to our presentation and get some updates from us.

First, we'll hear from Catherine Gerkis. She's our Director of Investor Relations.

She'll provide a brief disclosure regarding certain regulatory matters concerning this call. Catherine, go ahead.

Thank you, David, and good morning, all. Today's call may include forward-looking statements, which are based on management's estimates, assumptions, and projections.

There are no guarantees of future performance, and actual results may differ materially from those expressed or implied in these statements due to various uncertainties, including the risk factors set forth in our SEC filings, which you can find on the Investors page of our website, gladstoneland.com. We assume no obligation to update any of these statements unless required by law.

Please visit our website for a copy of our Form 10-Q and earnings press release, both issued yesterday, for more detailed information. You can also sign up for our email notification service and find information on how to contact our Investor Relations department.

We are also on X, @GladstoneComps, as well as Facebook and LinkedIn. The word for both is The Gladstone Companies.

Today, we'll discuss FFO, which is funds from operations, a non-GAAP accounting term defined as net income, excluding gains or losses from the sale of real estate and any impairment losses on property, plus depreciation and amortization of real estate assets. We may also discuss core FFO, which we generally define as FFO adjusted for certain non-recurring revenues and expenses, and adjusted FFO, which further adjusts core FFO for certain non-cash items, such as converting GAAP rent to normalized cash rent.

We believe these metrics can be a better indication of our operating results and allow better comparability of our period-over-period performance. Now I'll turn it back to David Gladstone.

All right. Thank you.

Let me just talk about the portfolio we have. We currently own about 98,000 acres across 142 farms and about 56,000 acre-feet of water, which is about 18 billion gallons.

Our farms are in 14 different states, and our water assets are all in California. We didn't have any acquisitions or dispositions this active quarter, but quarter end we sold a property consisting of two citrus farms in Florida for about $3 million.

It was with a small amount of acreage. The original tenant had defaulted on the lease, and the replacement tenant was at a substantially lower rental rate.

Given the continued weakness of the citrus market, we felt it was best to sell the property and use the proceeds to pay off some related mortgages or some other assets that we want to do something with. We may consider selling some additional farms over the next few quarters as part of our ongoing portfolio review.

If we use most of the proceeds to pay down debt and buy back preferred stock, it'll be very strong for us. We'll continue to take a disciplined approach to the acquisitions and staying active in the market so we're ready when the conditions improve.

It makes sense for us to start growing the portfolio again. That'll be when interest rates have gone down.

Anything you can do talking to the Fed and telling them to lower that rate, we'll be pleased to do some more transactions. As we've discussed in all of our prior calls, I think forever now, due to the market permanent crops, particularly nuts and wine grapes, we modified the leases structure there so that a handful of farms to reduce the growers' fixed costs while allowing us to participate more in the upside through higher crop share participation.

We're becoming much more involved in the operations. Overall, the 2025 almond and pistachio harvests were very strong, with yields generally exceeding expectations.

While the final pricing of the pistachio crop has not yet been determined, believe that just takes forever to get all these things done, we've received indications from certain processors that our final price is expected to be higher than the prior year. We expect to recognize a meaningful amount of additional revenues from that harvest in the fourth quarter of this year.

We entered into similar arrangements for most of these farms for the 2026 crop. We're continuing down the same path that we set up to get us through all of that past problems.

Majority of the related revenues and earnings again being recognized during the fourth quarter. You'll hear from our accounting staff about how much we've got of that later.

I also want to remind everyone that the crop insurance continues to play an important role here, as it helps to limit the downside risk on the farms, particularly given their strong production history. We could be a big year and then have some problems and the insurance always protects us from the big downside.

Our goal is still eventually transition these farms that we're doing on a shared basis back to more traditional lease structures with fixed-base rents. The timing of that will depend on several factors, such as crop productions, pricing, interest rates, input costs, and most importantly, water availability.

We're finding some problems out there with the water availability. Looking ahead, we have six leases scheduled to expire over the next six months.

In total, these leases are about 3.5% of our leasing revenue for the year ending 2026. We're currently in discussions with both existing and prospective tenants that we expect to be able to renew each of the leases prior to the expiration.

We're also pursuing several alternative revenue opportunities, including water leases. We've got farms that have water, and we can lease that out.

Following the programs and some of the solar things that have been talking about in four of our tenants. We've received some cash rent payments from a couple of these tenants during the quarter, but we'll keep them on non-accrual status until we see a consistent pattern of timely payments.

We'll stop here and turn it over to our Executive Vice President Bill Reiman. He's out in California.

Is that where you are today, Bill?

Actually in Idaho today, David. Thank you.

Go ahead.

As David said, the second quarter really is highlighted by really strong demand in almond and pistachio markets. We've seen almost weekly price increases in almonds and really strong bumps in pistachio grower pricing.

We also reported last quarter about early marketing bonus that was announced in February. We received that in April.

I also read that just yesterday that these are the strongest almond prices we've had in 10 years. Haven't done that research myself, but those trends are really good.

This upward trend in crop prices, coupled with really a largely uneventful quarter as far as weather and growing conditions are concerned, has kept our budget projections on track to outperform for the 2025 crop year and tracking really well for 2026. Our primary pistachio processor recently announced an expected final pricing for 2025 crop of at least $2.70 a pound for split in-shell, certainly is higher than we had projected all year.

They also announced initial pricing for 2026 of $2.50 a pound for split in-shell, which is two-thirds higher than it was for last year. These are significant grower price increases, will have a major impact on all of our properties under modified lease arrangements, ones we operate directly, and even our crop share lease agreements.

We began shaking almonds on July 28th, harvest season is here. The almond crop on our properties looks slightly larger than last year's crop, we expect at least the same yields, maybe a little bit better.

Reports across the state are saying yields in general are slightly lower, which is one of the factors supporting these price increases. Pistachio orchards everywhere are extremely light, like we reported last quarter.

We believe the overall industry was a little overly optimistic initially, but because we were projecting a much lower crop than many of our neighbors, but in the last 30 days or so, that reality settled in. That, in turn, has caused buyers to bump up offers for new crop to levels way above last year.

Crop expenses continue to track within our original budgets. There's been a lot of discussion in marketing circles about how to handle such a down year without jeopardizing what's likely to be a very strong production year in 2027.

We feel our processors are positioned the industry to maintain pricing so that 2027 will beat 2025, even if we have a barn door busting crop yield. Wine grape market really hasn't changed a lot.

The 2026 crop is early. Harvest has started all over the West.

We expect that '26 crop to be down, and not just because of vineyard removals, just the crop looks light. It's an encouraging sign, and couple that with bulk wine inventories finally getting closer to manageable levels.

We hope to see better demand for new crop this year and in the next couple of seasons. We may finally be at a place where the industry is on the back side of the oversupply situation.

In real estate markets, we talked last quarter, we think in the Western U.S., most real estate markets have bottomed out and are starting to get stronger again. We're seeing a strong divergence in valuations around water costs and availability.

Properties with good cash flow potential are also getting strong attention. Coastal California values remain flat with higher than normal inventory.

Pacific Northwest is stable, with really good properties transacting swiftly. I'd say values and rents are stable.

Stable interest rates combined with profitable crop pricing trends is resulting in a little more lending activity. We're seeing growers a little bit easier getting lines of credit.

It appears these banks have money to lend. There's a clear path to cover debt payments.

Financing deals can get done. I'll end my portion on water.

The winter was a little disappointing, particularly from a snowpack perspective, and federal water allocations were really disappointing. We did get an additional 3% bump in allocation yesterday, which doesn't sound like a lot, but it helps.

It helps not only free up a little bit of water, but lowers the pricing in some of our water deals that we have in place. We're finding decent purchase opportunities, but we remain diligent, conservative with what we go after.

Our goal is to only acquire water at a price that fits into the economics of a particular crop and a particular area. Looking at the weather forecasts, I think everybody sees it in the newspapers and online, a very strong El Niño situation coming this winter.

We're making preparations for a long water situation for this upcoming winter, there should be some really good opportunities for water acquisitions. Beyond just acquisitions, flood flows, that's kind of what we're keeping an eye on, being prepared to take on excess water during storming periods.

Team continues to evaluate all these opportunities, and the goal continues to be to strengthen the overall water security of the portfolio, both through short-term strategic water purchases and continue to invest in water delivery, storage infrastructure, and identify opportunities to create synergies across our farm assets. That's it for me, and I'll turn it over to our CFO, Lewis Parrish.

All right. Thank you, Bill.

Good morning, everyone. I'll start with a brief update on some recent financing activity.

We did not secure any new borrowings or repay any loans during the quarter. However, after quarter end, we repaid a $3 million mortgage loan in connection with the property sale that David mentioned earlier.

In addition, during the quarter, we added several unencumbered properties to certain existing and new credit facilities that increased our immediately available capital by about $50 million. We issued about $14 million of common stock under the ATM program earlier in the quarter at an average cost of capital of about 5.5%.

Those proceeds were used to repay our line of credit and fund preferred stock repurchases. We have not issued any additional shares since April, given where the stock has been trading.

Also since April 1st, we've repurchased $13 million of preferred stock at an average repurchase yield of 7.2%, resulting in a total gain of about $1.1 million over that time. Turning to our operating results, for the second quarter, we reported a net loss of about $8.5 million and a net loss to common shareholders of $13.5 million, or 32 cents per share.

Adjusted FFO for the second quarter was negative $1.6 million, or negative 4 cents per share, compared to negative $3.5 million, or negative 10 cents per share, in the same quarter last year. The improvement in AFFO was primarily driven by higher operating cash revenue and lower interest costs, partially offset by higher property operating expenses.

Year-over-year, fixed-base cash rents increased by about $900,000, and it was driven by rent that we collected from certain tenants that remain on non-accrual status, as well as leases executed over the past year. These increases were partially offset by the lost revenue from farms that were sold over the past year.

Participation rents increased slightly, primarily due to higher almond prices for the 2025 crops. Direct farming operations generated a net profit of about $590,000 during the quarter, primarily driven by the harvest and sale of an orange crop on a Florida farm following the early termination of the prior tenant's lease, as well as higher almond prices.

On the expense side, our recurring cash operating expenses increased by about $560,000. Total related-party fees increased primarily due to a higher administration fee.

The increase in property operating expenses was largely driven by higher professional fees associated with protecting water rights on certain farms in California and also additional costs related to properties that were vacant, directly operated, or on non-accrual status. G&A expenses increased primarily due to higher SOC 1 related expenses and increased professional fees.

Finally, cash flows from operations increased, largely as a result of higher cash receipts from participation rents and crop sales, a decrease in cash allowances paid to certain tenants, and lower interest payments. Turning to liquidity, we currently have about $125 million of immediately available capital, and we also have about $110 million of unpledged properties that could be used as additional collateral.

Over 95% of our borrowings are currently at fixed rates, with a weighted average interest rate of 3.45% locked in for an average of another 2.3 years. Looking at upcoming debt maturities, we have roughly $33 million of loans maturing over the next 12 months.

Given the value of the underlying collateral, we do not anticipate any issues refinancing these loans should we choose to do so. In addition, we have $17 million of scheduled principal amortization payments coming due over that time, representing less than 4% of our total debt outstanding.

We also have about $148 million of loans with fixed-rate terms that are scheduled to reset over the next year, though the loans themselves are not maturing. This includes about $130 million of loans under our MetLife facility that are scheduled to reprice in January of 2027.

We are actively evaluating all of our options with respect to these loans ahead of the scheduled resets. Finally, regarding to common distributions, in July, we declared a monthly dividend of 4.67 cents per share for the third quarter 2026, keeping the dividend flat.

On a current stock price of $8.21, this warrants a 6.8% annualized yield, which is well above the REIT sector average. With that, I'll turn it back over to David.

Thank you, Lewis. Overall demand for prime farmland growing berries and vegetables remains stable across most of the regions, particularly along the coast of California.

We're also starting to see some signs of improvement in certain permanent crops, both the pricing and the broader economics around those crops. We are very hopeful that the worst is over and behind us, but it's still too early to say that we're fully in the clear.

In closing, over the long run, we expect inflation, particularly in food sectors that we're in, to continue to move higher, and we expect the values of the underlying farmland to increase over time as a result. We expect this especially to be true with regard to healthy foods such as fresh fruits and vegetables and nuts, as long-term trends toward healthier eating habits continue to grow.

Now, I'll open up for questions. Operator, would you come on and please direct this?

Thank you. Good morning.

I wanted to ask you on the participation rents. If you could provide some color on how much participation rents are you expecting in second half of this year?

I don't think we're prepared to give a final number yet just because the pistachio pricing is still in flux, the bonus for the '25 crop. We do have a pretty good handle.

We know what the initial pricing for the '26 crop is, but yields are still unknown at this point. I'll let Bill comment on this more, but given where we think we've seen yields and given higher pricing, we are expecting higher amounts this year.

I don't think we're prepared to give a final range of what that number is going to be. Bill, anything you want to add to it as far as what yields are looking like?

I would just say it's so early. Of course, we're starting almonds, like I mentioned.

We're literally just less than two weeks in. It's just too early to have a lot of confidence in any trends we see so far.

Far, good, but there's a long way to go. Then pistachios, we probably aren't going to start anything till closer to the 1st of September.

Just way too early on the crop yield side to give any decent guidance there. Pricing is so much stronger than a year ago.

We feel that those things are pushing us towards the positive.

Okay. A second question follow-up on the second quarter fixed revenues.

Were there any non-recurring one-time items in the revenue number for the second quarter?

There was one item that we received a cash payment from a tenant who we placed on non-accrual status last quarter, Q1 of '26. We did receive a cash payment from them this quarter.

I think for the quarterly revenue, that was about $700,000. We would like for that to be recurring, but given that we're keeping that tenant on non-accrual status, I wouldn't bake it in as a recurring payment at this time.

All right. The last question, can you provide some details on the impairment charge you recognized on four farms in Arizona?

Yes. That property consists of four different farms down in Arizona.

We've signed a PSA with a buyer subsequent to quarter end. We marked it down to the sale price per that agreement.

That transaction has not closed, but we are expecting it to close hopefully late Q3, possibly early Q4 at this point.

All right. Thank you.

That's all I had.

Sure.

Other questions?

Thanks. Good morning.

I want to walk through the pistachio market update. Appreciate the additional color.

I think last quarter we were discussing how you received about 50 cents a pound in your first quarter marketing bonus, thought it might be anywhere from an additional 40 to 90 cents. Based on this update, it looks like you may be expecting towards the high end of that range, an additional dollar per pound this year?

I would say yes. No, I would definitely say it's on the upper end of that range.

Okay.

Craig, just to add to that, just based on what the processor said, they didn't necessarily commit to it, but with the expectation being at least $2.70, that would imply an additional bonus of at least 70 cents per pound. Read into that quote-unquote "at least" part what you will, but that does have us thinking that it's going to be on the higher end of that range that we gave.

Got it. Okay.

I guess just mechanically, how should we think, you're starting here at $2.50, which is up two-thirds from last year. How should we think about the timing of when that's recognized?

Should we think maybe a third this year and then two-thirds next year, or how should we think about that?

I think a lot of it's going to depend on the yields. Just speaking from a pricing standpoint, that $2.50 is the initial guaranteed price.

We will get $2.50 per pound that gets delivered to the processor. The bonus on top of that, which could be a dollar, could be more, that will be recognized in 2027 of Q4.

Now, the yield piece of that equation is what's not known yet. Again, I'll let Bill comment further, but this is an off year for pistachios.

Couple that with the weather events, the yields are expected to be down from last year. Is it going to be fully offset by the large increase in pricing that's kind of TBD at this point.

Bill, anything further from your side on that?

Yeah. Yields, obviously we haven't started yet, but it is a down year.

The fruit on the trees is kind of a mess. There's blanking.

You start with a down year to begin with, a naturally down year, and then you have this heat spell in March that messed up pollination, you had a lot of crop drop. Then the crop that's hanging in the trees, a lot of blanks, a lot of issues, small sizes.

We're seeing that in almonds as well, and that's across the board, small sizes. That puts downward pressure on yields.

This year's just a bit of a wild card on crop yield. Everything should be in by mid-November on pistachios.

Then we'll know what our total production is going to be. Like Lewis said, multiply that by the $2.50, and that's this year's pistachio revenue, plus any blocks that we have in crop insurance claims on, which we've already opened some crop insurance claims, cause we know we have some blocks that we just know we're going to be under our crop insurance break point.

It's a little bit hard to forecast at this point in time crop yield and how the crop insurance is going to get paid out.

Got it. Okay.

Thanks. That's it for me today.

Any other questions?

Good morning, everyone.

Morning.

Starting with the vacant assets you still have today, any update on potential resolutions for those 10 farms?

Yes. The majority of the acreage, we think we are close on getting some alternative leases in place, like David mentioned, solar leases, maybe some cattle leases on some of that fallowing programs.

We do think we'll have some of those executed before the end of Q3. Others, we're still talking with new tenants, hoping to get somebody on.

Bill, any more progress that you want to note on some of these alternative leases that we're working on?

Yeah. Everything just seems to move slower these days, but we have activity on virtually all of them of getting something in place.

In some cases, the deal is already made and we know what we're going to receive and when we receive it, we just don't have the contracts completed. There's minutiae there that we're dealing with.

I would say in most cases we're getting there. I would also note that most of the acreage that's been vacant recently was the reason for that was a transition.

We pulled a lot of almond trees out, and those are properties that are classified as vacant. Took a long time to get the trees out.

Took a long time to get those properties cleaned up. Then at the same time working on what is next for those has been going on.

I just think it's important to note that the timing here is getting stretched out primarily because of that transition that we had to go through.

Just maybe kind of rough brackets, any potential ballpark on what the NOI contribution could be from those vacancies being resolved?

We could get close to their historical performance.

From the three that we think we're closest on, that we think that could be an annual add of about a million and a half dollars.

Okay. Then in terms of upcoming lease expirations, any color you can provide on how discussions are going with existing tenants, new tenants, just outlook for those properties as those leases roll?

Just looking at the next six months out, they're pretty standard leases. We expect to probably renew with each of the existing tenants at similar terms.

The rent from these expirations over the next six months, they make up about 3.5% of our current annualized rent. We would expect those numbers to stay pretty flat.

Anything to maybe be aware of going forward that could cause kind of oscillations in property operating expenses? You mentioned water.

I know some of your leases have kind of water contribution agreements. I don't know if that could be kind of a variable, given we might be in a bit of a an interesting patch in terms of water availability between now and El Niño.

Just kind of curious how to think about that operating expense line item going forward.

There is one I'm sorry, go ahead, Bill.

No, go ahead. I was just going to say that with yesterday's announcement on federal water allocations, and I touched on it, that it was a 3% increase.

Without getting too complex in how water is priced, there is a published tiered system on water pricing. By increasing allocation by 3%, it bumped us into a category, or bumped down to the next category in terms of pricing.

The domino effect is that pricing and valuation of supplemental or excess water from for now until the next water year starts all goes down, right? I would say maybe last quarter we were feeling like, oh man, maybe water pricing as we get towards the end of the year is going to be up and that might cost us a little bit more money to finish out the year.

Now we're looking at the opposite, where that feels like that water expense, that pressure, upper pressure on water expense is actually going to be reversed. Just that little move is going to have a could have a big impact for us.

Then we see more water becoming available here as we get towards the end of the season. One of the things that happens, the state's been a little more aggressive than the feds, but they've been pretty conservative with releasing water out of reservoirs.

Reservoirs are above average for their historical levels. Then with the threat of a wet season coming, they need to make room.

Different owners of different water are going to be looking to sell stuff. As we get closer to winter, those prices go down.

We feel like water as an operating expense, there's some downward pressure here as we head into winter.

John, just a little bit more color as far as how that impacts the financial statement line items, there is one property where we are responsible for bringing a portion of the water to the property. We usually recognize the cost of that water usage one quarter in arrears, and that's just because it takes time for the final numbers and costs to get processed through the water district and made known to us.

I think in Q1, we recognized about $200,000 of that water cost, and that's water that was actually used in Q4. Now, most of this water is probably going to get used in the second half of the year, I would expect maybe a slight uptick in Q4 recognizing water that was used in Q3, as well as Q1 of '27.

Okay. Then lastly, just because it's mostly kind of topical, any tenants with exposure to kind of leafy green cultivation, and any impact you're seeing there at all?

I know it's probably not a big portion of the portfolio, but just kind of want to check.

I was wondering when this question might come up. Definitely negative impact from that.

A lot of our farms are on those areas are growing berries, but the Cyclospora outbreak, which hasn't been linked to any domestically grown fresh produce, it just seems that the way that information is moving around has caused a decrease in demand for all fresh produce. Look, in fresh produce, we're used to it.

We're used to quick-moving markets and ups and downs. As long as this doesn't last very long, it'll be just a blip on the screen.

As of right now, across all fresh produce, demand is down, markets are down, and we'll see planting sort of back off. We'll just see how this plays out as we transition into winter.

Great. I appreciate all that detail.

That's it for me. Thank you very much.

Great. Any further questions?

Okay. Thank you very much.

This was a kind of bumpy call that we had, but the second quarter is probably our worst quarter in trying to figure out what's going on in the marketplace. We'll have a lot more for you next quarter, and hope you save up all those good questions for us to answer.

That's the end of this.