Investor Presentation
NOVEMBER 2023
Disclaimer
Forward-looking Statements
This presentation made by Farmland Partners Inc. (the "Company," "FPI," "we," "us," or "our") contains "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" or similar expressions or their negatives, as well as statements in future tense. These statements include, among others, beliefs about the current condition of the market for agricultural real estate and our management's estimates with respect to net asset value per share. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs and expectations, such forward- looking statements are not predictions of future events or guarantees of future performance and our actual results could differ materially from those set forth in the forward-looking statements. For certain factors that might cause such a difference, see the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, and the Company's other filings with the Securities and Exchange Commission. Any forward-looking information presented herein is made only as of the date of this presentation, and the Company does not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.
Use of Market Data
We use market data throughout this presentation that has generally been obtained from publicly available information and industry publications. These sources generally state that the information they provide has been obtained from sources believed to be reliable, but that the accuracy and completeness of the information are not guaranteed. The forecasts and projections are based on industry surveys and the preparers' experience in the industry, and there is no assurance that any of the projected amounts will be achieved. We have not independently verified this information.
Non-GAAP Financial Measures
This presentation includes the use of certain non-GAAP financial measures, including Adjusted Funds from Operations ("AFFO") and earnings before interest, taxes, depreciation and amortization for real estate ("EBITDAre"). For the definitions of these measures and reconciliations of these measures to the most comparable GAAP measure, see pages 25-27 of this presentation.
All data presented is as of the date of this presentation, unless noted otherwise.
Farms photos on cover page areBonita Break (Louisiana)aboveCougar (California).
2
Highlights
Portfolio
- 178,000 acres(a) (approximately 7.8 billion square feet) owned and/or managed across the United States
- 147,000(a) owned acres
- 31,000(a) acres managed for third parties
- Diversified across 20 states
- Over 100 tenants
- Over 26 crop types
- 0% vacancy across the portfolio
Ironwood - Florida
- Values shown are approximate.
- Based on stock price of $10.98 on 11/2/2023.
East Bardolph - Illinois
Company
- Gross real estate book value of $1.1 billion
- Equity market cap of approximately $500 million(b)
- Over 300 properties acquired since IPO in 2014
- Property manager for $60+ million Opportunity Zone Fund
3
Why U.S. Farmland?
1. Rising Demand + Shrinking Supply
- Food consumption is one of the most basic human needs
- Increases with GDP per capita (higher protein diets)
- Increases with population
-
Large unmet demand: According to the UN Food and Agriculture Organization, in 2022, an estimated 29.6% of the global population -
2.4 billion people out of a world population of 8.0 billion - moderately or severely food insecure(1) - In contrast to traditional real estate sectors that experience consistent supply growth, agriculture land per capita consistently decreases
- Farmland converted to alternative uses (e.g., residential, solar)
- Water scarcity
2. Stable + Steady Returns(2)
- Farmland historically has delivered attractive returns over long holding periods
- Appreciation + income
- Farmland experiences low volatility through cycles
- High Sharpe ratio compared to S&P 500, bonds, NAREIT major sector average
- Low correlation with other asset classes
- Performs well in inflationary environments
3. Unique Attributes vs. Traditional RE(2)
- Low risk of obsolescence
- Traditional real estate may suffer from tenants' demand for newer assets or amenities
- Lower fungibility risk
- Traditional real estate may be exposed to changes in demand that are so severe that buildings become unusable over time (e.g., empty office buildings, shopping malls)
- Lower capital expenditure burden
- Traditional real estate assets depreciate over time, requiring constant reinvestment to maintain competitive positioning
- Most farmland becomes more productive over time
4. Untapped Institutional Potential(2)
- Farmland is one of the largest commercial real estate sectors, ~$3.4 trillion(3), with the lowest institutional ownership
Please see p. 28 for end notes.
4
Attractive Supply-Demand Dynamics
GDP/Capita (Current International $)(4)
25,000
20,000
15,000
10,000
5,000
0
1990 | 1995 | 2000 | 2005 | 2010 | 2015 | 2020 |
Worldwide Population (in Millions)(6)
12,000
10,000
8,000
6,000
4,000
2,000
0
1950 1970 1990 2010 2030 2050 2070 2090
Please see p. 28 for end notes.
Arable Land Worldwide (Acre/Person)(5)
0.90
0.80
0.70
0.60
0.50
0.40
1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 2021
Arable Land USA (Acre/Person)(5)
3.00
2.50
2.00
1.50
1.00
0.50
0.00
1961 1966 1971 1976 1981 1986 1991 1996 2001 2006 2011 2016 2021
5
Why Farmland Partners?
1. Mirroring U.S. Farmland Trends
- Near-zerovacancy
- Realized approximately 7.1% gross unlevered IRR across over $220 million of dispositions, driven by land appreciation even during lean years for the farm economy
- Land scarcity driven by alternative uses
- Farmers have access to government support programs (e.g., crop insurance)
- Long-terminvestment outlook
- Commodities: 2 to 3 quarters
- Rents: 2 to 3 years
-
Land: 2 to 3 decades
3. Positioned for Growth
- Access to capital
- Public Equity: Provides liquidity and acquisition currency for sellers seeking to defer capital gains
- Debt Capital: Long-standing relationships with ag lenders
- Private Capital: FPI growing its asset management business
- Robust pipeline of potential transactions
- Farms: Target accretive acquisitions with strong demand from high-quality tenants
- FPI Loan Program: Provides capital to farmers for growth or working capital, backed by high-quality farms
- Ability to execute
- Institutional capital coupled with boots on the ground allows for efficient identification and execution of new investment opportunities
2. High Quality Portfolio
- Diversified farmland portfolio of both row crops and permanent crops
- Portfolio extends across some of the world's most productive farmland
4. Aligned Management Team
- Internally managed REIT
- Board and management have large stock position (~10%)
- Team members in the field with "boots on the ground"
- Some management team members have farmed their own land
- Proprietary nation-wide network of tenants and other industry participants
- No fund structure forcing FPI to sell properties
6
FPI Overview
Wilder-Mercer - Illinois
Representative Assets
Row Crop Farms
- Crops are planted/replanted every year
- Crops are rotated to maximize soil health and market opportunities
- Tend to be commodity products like corn, soybeans, wheat, rice, cotton
- 90% of acres(a) in FPI portfolio (70% of total by value(a))
- Representative States: AR, CO, FL, GA, IL, IN, KS, LA, MI, MO, MS, NC, NE, OK, SC, TX, VA
Dallefeld - Illinois
- Values shown are approximate.
Permanent Crop Farms
- Trees, bushes, or vines are planted once and may last for 25 years or longer
- Tend to be more specialized products like tree nuts, citrus, avocados.
- 10% of acres(a) in FPI portfolio (30% of total by value(a))
- Representative States: AL, CA, FL, GA, MI
Jayne Ave. - California
8
Income Statement Overview(a)
Item
Explanation
Timing of Cash
Timing of Revenue Recognition
• | Fixed farm rent | • Farm rent: 50% to 100% of individual | |
Fixed Payments | • Wind, solar, recreation rent | leases paid before planting | |
• | Tenant reimbursements | (generally Q1) | |
• Management fees & interest income
- Generally straight-lined over the term of the lease contract
• | Rent paid by tenants, determined as a | • Vast majority of cash received after | • Variable rent is generally recognized when FPI | ||
Variable Payments | percentage of the farm revenue | harvest in Q4, with some spillover | has certainty of amounts (tenant crop | ||
• | Low-risk variable rent: one large ~$6.5 million | into the following year | insurance may provide a baseline) | ||
Direct Operations | • | Crop sales and crop insurance proceeds less | • | Varies by crop | • Crop sales, crop insurance, and COGS are |
Gross Profit | cost of goods sold | recognized when FPI has certainty of amounts | |||
Other | • | Auction and brokerage commissions | • | Varies | • Varies |
• | Miscellaneous | ||||
Supp.
Category
Fixed
Payments
Variable
Payments
Direct
Operations
Gross Profit
Other Items
GAAP Revenue Categories | GAAP Expense | ||||
Rental Income | Tenant Reimb. | Crop Sales | Other Revenue | Cost of Goods Sold | |
• | Fixed farm rent | • Tenant | |||
• | Solar, wind, recreation rent | reimbursements |
- Variable farm rent
• Crop sales | • | Crop insurance | • Cost of goods sold |
• | Auction | ||
• | Brokerage | ||
• | Misc. items (various) |
- For revenue and cost of goods sold details, please see Supplemental Packages:https://www.farmlandpartners.com/> Investor Relations > Events & Presentations.
9
Tenant Underwriting
How to Underwrite Credit Risk?
- FPI's standard lease includes:
- Lien interest in growing crops
- Crop insurance as required
- Personal guarantees
- 50% to 100% of fixed farm rents are paid in advance of planting season (generally Q1)
- Creates positive working capital cycle for much of the year
- Unlikely that a farmer would default with prepaid rent and growing crop
- Low tenant turnover
- FPI maintains long-term relationships with tenants
- FPI has a deep understanding of the business as members of the team have been farmers themselves
- Low uncollected receivables and/or bad debt expense
Cash Receipts of Fixed Farm Rent
120% | 2017 | 2018 | 2019 |
2020 | 2021 | 2022 |
100% | Ratable |
80%
60%
40%
20%
0%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Low Tenant Turnover (Farm Leases)
40 0 | No Change Change | |
350 | ||
300 | ||
Farms | 250 | |
200 | ||
150 |
10 0
50
0
3/31 /2017 | 6/30/2017 | 9/30/2017 | 12/31/201 7 | 3/31 /2018 | 6/30/2018 | 9/30/2018 | 12/31/201 8 | 3/31 /2019 | 6/30/2019 | 9/30/2019 | 12/31/201 9 | 3/31 /2020 | 6/30/2020 | 9/30/2020 | 12/31/2020 | 3/31 /2021 | 6/30/2021 | 9/30/2021 | 12/31/2021 | 3/31 /2022 | 6/30/2022 | 9/30/2022 | 12/31/2022 |
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Disclaimer
Farmland Partners Inc. published this content on 02 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 03 November 2023 11:45:51 UTC.