Farmland Partners (FPI) Earnings Transcript

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Date

Thursday, February 19, 2026 at 11:00 a.m. ET

Call participants

• Executive Chairman — Paul Pittman
• President and CEO — Luca Fabbri
• Chief Financial Officer — Susan Landi
• General Counsel — Christine Garrison

Takeaways

• Net Income -- $32.2 million for the year and $21.8 million for the quarter, or $0.65 and $0.49 per share, respectively; both lower than the same periods in 2024.
• Adjusted Funds From Operations (AFFO) -- $17.9 million for the year and $11.4 million for the quarter, or $0.39 and $0.26 per share, respectively; both higher than the prior year.
• Total Operating Revenues -- Declined by approximately $6 million, primarily due to asset dispositions in 2024 and 2025; partially offset by higher variable rents and increased interest income from the FPI loan program.
• Total Operating Expenses (excluding impairments) -- Decreased by about $3.6 million, driven by lower property costs, lower depreciation after asset sales, and reduced G&A due to lower bonuses and absence of the previous year's severance and accelerated stock-based compensation.
• Impairment of Assets -- Increased by $17 million, attributed to West Coast properties revalued lower; impairment was recorded in the second quarter.
• Interest Expense -- Down by $9.2 million year over year due to significant debt reduction since October 2024.
• Dividend -- Increased by 50% to $0.09 per share per quarter; management cited, "we have increased the dividend by 50%," referencing improved capital structure and cash flow.
• Series A Preferred Repayment -- All outstanding Series A preferred units were repaid in cash rather than through conversion, which management noted would have been "very dilutive."
• Asset Sales -- Disposed of the Murray Wise subsidiary; management described a "double benefit" from simplifying operations while retaining access to former team market intelligence.
• Credit Facility Capacity -- $164 million undrawn as of December 2025; reduced to $111.7 million after net borrowings to redeem preferred units post year-end.
• Farmer Mac Facility -- Increased from $75 million to $89.6 million in December 2025 through a successful amendment.
• MetLife Loan Resets -- Four loans totaling $26 million scheduled for reset in 2026; one repriced in January at 5.19%.
• 2026 Net Income Guidance -- Projected at $8.8 million to $10.9 million.
• 2026 AFFO Guidance -- Projected at $14.4 million to $16.4 million, or $0.33 to $0.37 per share.
• Variable Payment Crop Sales and Insurance (2026) -- Expected to decrease, with drivers including "early season outlook on citrus and avocados" and effects from 2025 dispositions.

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Risks

• Impairment of assets rose by $17 million, all related to West Coast properties "that we have concluded had a loss in value," with the impairment recognized in the second quarter.
• 2026 guidance implies substantial declines in both net income and AFFO, driven in part by lower variable payment crop sales and insurance revenues, and fixed farm, solar, wind, and recreation rents reflecting the full-year impact of recent dispositions.
• Management remains cautious in its revenue outlook due to agricultural seasonality and inherent uncertainty, with CEO Luca Fabbri stating, "agriculture is a very uncertain business until you actually go and harvest the fruit and sell it in some cases."
• California market pricing is described as not "great," with further asset liquidations expected as management intends to "gradually liquidate" most California holdings except select almond and tree nut properties.

Summary

Farmland Partners Inc. (NYSE:FPI) reported higher AFFO for both the quarter and year, attributed to increased activity in the FPI loan program and lower interest expenses from significant debt reduction. The sale of the Murray Wise subsidiary enabled balance sheet simplification and operational streamlining without severing market intelligence ties. The company fully repaid its Series A preferred units in cash, reducing potential shareholder dilution and removing a capital structure overhang. Asset impairment charges of $17 million on West Coast properties, coupled with lower revenues primarily resulting from asset dispositions, contributed to a year-over-year decline in net income despite cost control. Capital allocation priorities were reflected in a 50% dividend increase, while the 2026 outlook signals a cautious stance amid ongoing sector and geographic repositioning.

• Repayment of Series A preferred units involved drawing on the company’s credit lines after year-end, with undrawn capacity standing at $111.7 million at the time of the call.
• The Farmer Mac facility’s expansion increased available borrowing capacity for upcoming projects and refinancing needs.
• Opportunistic sales in California and non-core states are planned, with management emphasizing discipline in price realization and an intention to focus growth in Illinois and similar core markets.
• G&A reductions in 2026 result from the sale of Murray Wise and accompanying payroll cuts, yielding a "sustainable" run-rate according to management.
• Interest expense savings arose primarily from earlier debt paydowns and structure adjustments, supporting higher operating cash flow and dividend capacity.
• The FPI loan program is expected to remain steady or grow slightly, as management cited ongoing demand from "struggling farmers," viewing the activity as countercyclical and strongly collateralized.
• MetLife loan resets and the anticipated repricing of a term loan to approximately 5.3% align with prevailing market rates, potentially moderating future interest expense volatility.
• No new acquisitions were included in 2026 guidance; management’s focus remains on capital efficiency and shareholder returns rather than platform expansion.

Industry glossary

• AFFO (Adjusted Funds From Operations): A REIT-specific non-GAAP performance metric representing recurring/normalized cash flow, calculated as funds from operations adjusted for capital expenditures and other non-cash expenses.
• FPI loan program: Farmland Partners’ direct lending platform providing loans to farmers secured by farm real estate, distinct from property rental revenue.
• Impairment: Non-cash accounting write-down indicating that certain assets are no longer expected to recover their carrying value, thus reducing reported earnings.
• Farmer Mac facility: A secured credit facility provided through Farmer Mac, supporting portfolio financing and refinancing for farmland assets.

Full Conference Call Transcript

Luca Fabbri: Morning, everybody, and welcome to Farmland Partners Inc. fourth quarter and full year 2025 earnings conference call and webcast. We truly 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, 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, and thank you to everyone on the call.

Christine Garrison: The press release announcing our fourth quarter earnings was distributed after market closed yesterday. The supplemental package has been posted to the Investor Relations section of our website under the subheader Events and Presentations. Those who listen to the recording of this presentation, we remind you that the remarks made herein are as of today, 02/19/2026, 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 market.

We will also discuss certain non-GAAP financial measures, including net operating income, FFO, adjusted FFO, 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 full year 2025 earnings, which is available on our website, farmlandpartners.com, and is furnished as an exhibit to our current report on Form 8-K dated 02/18/2026. 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, and we advise listeners to review the risk factors discussed in our press release distributed yesterday and in documents we have filed with or furnished to the SEC. I would now like to turn the call to our Executive Chairman, Paul Pittman. Paul?

Paul Pittman: Thank you, Christine.

Paul Pittman: So it was a very, very good quarter and a very good year for the company. Luca will go through many of these things in detail. But super strong AFFO. Very strong asset sale program. We have continued to simplify the business with the sale of Murray Wise. We reduced our debt and our leverage overall, particularly when you consider that we have now paid off the preferred, so senior claims to common shareholders have been reduced substantially. And now we have increased the dividend by 50%. This is, you know, something that has taken us a long time to get here.

But it is driven by disciplined cost control, and disciplined strategic thinking with regard to what assets to own and what assets not to own. That process is driven at this point largely by Luca and the rest of the management team in Denver. But as you all know, I am still pretty involved as well. So with that, I will turn it over to Luca to be a little more specific about the events of the past year.

Luca Fabbri: Thank you, Paul. I will actually pass the ball here to Susan Landi, our CFO, to walk you guys through more specific details about our performance within the quarter and the year. So I will speak also to some kind of broader general comments. We had a very, very strong Q4 in the context of a very strong year. I just want to remind everybody that this is kind of as expected. We historically have a very strong seasonality emphasis on Q4, especially on the revenue side, because of the nature of some revenue streams that we recognize only when we actually have actual cash receipts.

We, as Paul also mentioned, had embarked on an effort to really strengthen our balance sheet and our liquidity access, preparing for the repayment of our Series A equity that we just repaid here in February. So we were able to do so as a cash repayment rather than a common stock conversion, which would have been very dilutive. So we are very happy that we were able to strengthen our balance sheet and preserve the value embedded in our stock for our shareholders. We sold our brokerage and auction asset management subsidiary MWA to Peoples Company, but we continue to have a very close working relationship with the buyer and with our former team over there.

So we essentially got a double benefit of simplifying our business and streamlining a little bit while not really losing access truly to the market intelligence that we derived from having that team within our organization. A quick word about the 2026 outlook. It is also very strong. You know, our approach, especially at the beginning of the year, given the comment that I just made about seasonality, we try to be realistic and provide the best possible kind of picture to our investors as to what we expect for the year. But, you know, agriculture is a very uncertain business until you actually go and harvest the fruit and sell it in some cases.

So we tend to remain cautious at the beginning of the year, given that seasonality that is still far away from us. As far as dispositions are concerned, in 2026, we expect to continue doing little marginal improvements to our portfolio, with some emphasis in California, for example. And we will do so whenever we have the opportunity to do it at what we consider fair prices that reflect the intrinsic value of the assets that we are disposing. Given all of that, we felt very comfortable in raising our current dividend by 50% to $0.09 per share per quarter.

And we look forward to proving to the market that was a very strong choice, a very, very good choice, and possibly, hopefully, outperforming the performance that we are expecting for the year. I will now turn the call to Susan Landi, our CFO. Susan?

Susan Landi: Thank you, Luca. I will be covering the financial results from 2025 and guidance for 2026. I will be referring to the supplemental package, which is available on the Investor Relations of our website under the subheader Events and Presentations. Net income was $32,200,000 for 2025, $21,800,000 for the quarter, or $0.65 and $0.49 per share available to common stockholders, respectively, which is lower than the same periods for 2024. AFFO was $17,900,000 for 2025, $11,400,000 for the quarter, or $0.39 and $0.26 per weighted average share, respectively, which was higher than the same periods for 2024. There are several key drivers of these variances.

Total operating revenues declined by approximately $6,000,000, but this is primarily because of the dispositions that occurred in 2024 and 2025. These declines were partially offset by an increase in variable rents during the fourth quarter and increased interest income due to higher average balances on loans under the loan program. Overall, total operating expenses excluding impairments were down by approximately $3,600,000. This is primarily due to lower property operating costs and depreciation related to 2024 and 2025 dispositions and lower G&A expenses due to lower bonus expense in the current year and a one-time severance expense of $1,400,000 and accelerated stock-based comp that was recorded in the prior year.

Impairment of assets increased by $17,000,000, which was related to certain West Coast properties that we have concluded had a loss in value. This impairment was recorded in Q2. Other income was lower than prior year due to lower gains on dispositions, but this was partially offset by a $9,200,000 reduction in interest expense as a result of significant reductions in debt that have occurred since October 2024. The increase in AFFO primarily relates to the increased activity under the FPI loan program, lower interest expense from the reduction of outstanding debt, and overall lower operating expenses. There are a few key capital structure items that I would like to highlight.

First, we had undrawn capacity on the lines of credit of approximately $164,000,000 at December 2025. As of today, we have undrawn capacity of approximately $111,700,000. The net borrowings subsequent to year-end were primarily utilized to redeem the remaining 68,000 outstanding Series A preferred units. This removed the common stock overhang and further simplified our balance sheet. We also successfully amended our Farmer Mac facility in December, which led to an increase in our facility size from $75,000,000 to $89,600,000. Four MetLife loans have resets coming up in 2026 on debt that totals approximately $26,000,000. One of these loans repriced in January at 5.19%.

Page 15 has our outlook for 2026; the assumptions are listed at the bottom of the page. The forecast net income range is from $8,800,000 to $10,900,000. The forecasted range of AFFO is $14,400,000 to $16,400,000, or $0.33 to $0.37 per share. On the revenue side, fixed farm, solar, wind, and recreation rent reflects the full-year impact of 2025 dispositions as well as lease renewals. And variable payment crop sales and crop insurance is expected to decrease from 2025, partially from our early season outlook on citrus and avocados and partially from 2025 dispositions. On the expense side, a decrease in property operating expenses and depreciation, depletion and amortization is due to the dispositions that occurred in 2025.

In addition, G&A decreased as a result of lower payroll costs primarily due to the sale of MWA and due to lower expected credit losses on loans. Interest expense did increase as a result of borrowings that have occurred thus far in 2026. This summarizes where we stand today. We will keep you updated as we progress through the year. This wraps up our comments this morning. Thank you all for participating. Operator, you can now begin the Q&A session.

Paul Pittman: Thank you. Quick reminder before we start the Q&A.

Luca Fabbri: If you would like to ask a question, please press

Operator: and A. If you would like to withdraw your question or your question has been answered, simply press star 1 again. Thank you. And we will take our first question from John Massocca from B. Riley. Please go ahead. Good morning. Maybe looking at the guidance you mentioned a little bit of the drivers. Because I am thinking about the change versus in variable rent versus 2025. Kinda how much of that is asset sales roughly, and how much of that is a different look on kind of, you know, farm revenue?

Paul Pittman: Luca, you want to take that question, please?

Operator: Yeah. I am going to take it first, and I am going to hand over

Luca Fabbri: to Susan. On the variable payments, it is a little bit of both, actually. There is both asset dispositions and the fact that some of our variable payments performed really, really strongly in Q4 2025. And we are taking a little bit more cautious approach in forecasting their performance in 2026 in Q4. And, to be honest, this is really not based on any hard knowledge, because, you know, both crop yields and crop pricing in Q4 is completely unknown to us. It is just a matter of being a little bit more cautious in our forecast. Susan, anything that you want to add to that?

Susan Landi: No, except that the majority of the decrease does relate to dispositions. We did have, you know, our farm rents were relatively flat. So we did primarily single-year renewals as a result of that. But I would say the vast majority of that decline would be related to 2025 dispositions.

Operator: Okay. That is with the fixed farm rent.

Susan Landi: Yeah. For the fixed farm rent.

Operator: Yeah. And then maybe sticking with guidance a little bit. As I think about kind of the year-over-year decline that is expected in G&A, how much of that maybe is Murray Wise? How much of that is related to kind of expectations around your loan portfolio, and how much of that is just other kind of efficiencies? And I guess in the longer term, is the 2026 number you think close to what the run rate maybe is for you as an operating business?

Luca Fabbri: So a large part of it

Operator: Go ahead. Let me handle that one if you do not mind.

Paul Pittman: So Murray Wise, there is a significant reduction in the G&A cost because we had quite a few employees which we no longer have on the payroll. So it is a big chunk of it. But we are also making some other cost reductions in the company in the North, general overhead costs. So it is a combination of all of those things. And, you know, frankly, I think that is sustainable, and ongoing run rate is where we are at for the 2026 year.

Susan Landi: Okay. And then on the,

Operator: disposition side, how should we kind of think about the runway for dispositions? How much of that is maybe contingent on the California market becoming, you know, more open and having more transaction activity? You know, are there other things kind of in your portfolio that you think are kinda saleable today or, you know, beyond some of your core Corn Belt holdings?

Paul Pittman: Yeah. So everything in the portfolio is saleable. I mean, no, nothing that would not sell. As far as California goes, the market there is now open again. The pricing is not great, by the way, but the market is open again. It went through sort of the catharsis of buyers and sellers being super separated in terms of expectations of value. But that gap has now closed out, so these transactions are occurring again. We will continue to weed out California. We have soured on California full stop. The very best properties we have in almonds, in particular almonds and other tree nuts, likely to hold those. That Olam transaction is incredibly good for us.

But for most of the rest of it, we will gradually liquidate it. But, you know, we are disciplined in terms of achieving the highest reasonable prices that we can get under current market conditions. As far as the rest of the country goes, you know, the overwhelming majority outside of California is now based in Illinois. We will continue to sort of whittle down exposure in other states as much as anything for efficiency reasons at this point. If you are down to just one or two farms in a state, you either have to grow again or you need to, frankly, liquidate those. And so we will see some sales there.

And then, you know, things in Illinois are for sale if somebody wants to pay top dollar. We are super, super bullish on Illinois. A lot of those assets are up 30% or more since we purchased them. But if we can achieve those gains and distribute to shareholders, we certainly, as we have proven in the past, are willing to do that.

Operator: Okay. And then just one kind of maybe technical follow-up. If you did sell a meaningful amount of California assets, I know it would kinda depend farm to farm, but would that have more of an impact on your kind of fixed farm rents, or would that flow through to kind of some of the variable rent opportunities?

Paul Pittman: It would be a bigger impact on variable rent.

Operator: Okay.

Luca Fabbri: That is it for me.

Operator: Thank you very much.

Paul Pittman: Thank you.

Luca Fabbri: Thank you.

Operator: Our next question comes from the line of Craig Kucera from Loop Capital Markets. Please go ahead. Hey. Good morning, guys. I believe you had two FPI loans that were scheduled to mature in January. Were those repaid, or were there any extensions?

Susan Landi: Yeah. We did extend those to September.

Operator: Extended them to December, tenth of year. Okay. Great. And it would seem like you have seen a decent pickup in that program over the last year. Are you still seeing a decent amount of demand?

Paul Pittman: Yeah. The opportunity on the loan program is pretty strong these days. You know, the loan program is kind of countercyclical when land prices and farmer economics

Operator: So, you know, we are in an environment where there are some struggling farmers, so therefore we have some loan opportunities. As long as we are comfortable with the collateral, we frankly like to keep those loans out as long as we can because the returns are strong. That is the extension we made. You know, we are not troubled by extending as long as collateral is still solid. And so I would say that program will be either growing a little bit or at a steady state for the next year.

Operator: Okay. That is helpful. Changing gears, I think you mentioned in the supplement that you had a lease that transitioned from fixed to variable. Or it was fixed and variable, and it became just variable. How meaningful was that to the fourth quarter variable payments? And was that a lease now going to be sort of a standard three-year type of lease, or was that one of those one years you discussed?

Paul Pittman: Luca, I do not know the specifics there, so you and somebody on the team can take that.

Luca Fabbri: Yeah. This was not a very significant movement off the top of my head. It was a one-year extension on a farm in California that we have since disposed of, I believe.

Paul Pittman: Okay. In any case, it was not particularly

Luca Fabbri: significant to the P&L.

Operator: Alright. Great. You have got the term loan one, which I believe you are in the process of refinancing here this quarter. I think it matures in March. Can you give us a sense of kind of where you anticipate that might price?

Paul Pittman: Go ahead, guys.

Operator: Okay. Susan, you all go ahead. We think it is

Susan Landi: probably going to reprice at about the 5.3% range.

Operator: Okay. In other words, fairly

Luca Fabbri: very much in line with the market conditions that we see for this type of loans.

Operator: Okay. Great. It sounds like you guys might sell a few assets out of California opportunistically. I know there are not any acquisitions or dispositions in the guidance, but as you look at the market, whether that is in the Midwest or Southeast, are you seeing market pricing where you could accretively acquire at your current cost of capital, or seeing transactions that are attractive?

Luca Fabbri: So the answer to that question is

Paul Pittman: you know, pricing is not down any significant amount anywhere in the country. You know, in the core of the Midwest, it might be down two or 3% at most from the peak. You know, the other states may be a little bit more. California, of course, is different, but we are not going to be acquisitive there in any case. So I would say, when you think about making good investments, you know, this is an asset class where two-thirds of your return is appreciation and one-third is current yield. So you need to buy high-quality farms, and you need to buy value, and you need to be financed in a way that you can be patient

Operator: because that

Paul Pittman: increase in value will definitely come. It is sometimes a little lumpy, but it is highly certain. So, you know, we can find acquisitions where we could expand. Current yield will not be as high as we would want. If interest rates continue to lower, you may be in a place in which you are not running a negative spread between debt and farm yields, which makes expansion easier. That being said, our attitude is we do not need to grow for growth’s sake. Our attitude is to create value for shareholders, whether that is through dispositions or through growth. It is about raising money, growing money, if you will, not growing crops or the size of the business.

Operator: Okay. Thanks. Appreciate it. Thank you. Again, our next question comes from the line of Tousley Hyde from Raymond James. Please go ahead.

Paul Pittman: Hey, guys. Thanks for taking the question.

Tousley Hyde: With the increase in the dividend, how should we think about the capital recycling strategy and uses of disposition proceeds going forward, particularly as it relates to share repurchases?

Operator: So I think

Paul Pittman: share repurchases, as our stock price continues to appreciate, will probably decline. I still think we are trading way below our breakup value or our liquidation value of the portfolio assets. But that gap has certainly narrowed here in the first quarter. So I think stock buybacks will be less common than they have been in the past, assuming that stock price holds. As far as increasing the dividend, you know, we are increasing our dividend driven by increased AFFO. Obviously, it puts us in a position where we might have to make less special dividends to stay in tax compliance. But the dividend increase is largely driven by the cash flow expectation, not by asset sales.

Tousley Hyde: You know, the dividends

Paul Pittman: asset sales drive special dividends, but we do not really want to drive our regular common dividend based on asset sales because they are, frankly, unpredictable.

Tousley Hyde: Gotcha. Okay. Yeah. That is helpful. Thank you. And then I did have one quick follow-up related to the FPI loan program. I just want to make sure I am understanding the accounting and kind of contract terms correctly here with some of these renewals. If the original terms called for principal and interest to a maturity, is that entire balloon payment kind of being repackaged and extended out? Or is the interest being collected and then just the principal being extended?

Operator: Usually,

Paul Pittman: we are getting interest along the way. And principal is what is being extended. Not just that, we do not tend to capitalize interest. I would not say never, but that is not the ordinary course for us in most of our loans.

Luca Fabbri: Okay.

Tousley Hyde: Got it. Thanks. That is all I had. Congrats on the quarter.

Paul Pittman: Thank you.

Operator: There are no more further questions. I will now send the call back over to our President and CEO, Mr. Fabbri, for closing remarks.

Luca Fabbri: Thank you, Dustin, and thank you, everybody, for joining us today. We appreciate your interest in our company and look forward to updating you on our activities and results in the coming quarters.

Paul Pittman: And the meeting is now concluded.

Operator: Thank you all for joining. You may now disconnect.

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