Good morning and welcome to the Farmland Partners Inc. Third Quarter 2016 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Paul Pittman, Chairman and Chief Executive Officer. Please go ahead, sir.

Good morning and welcome to Farmland Partners' Third Quarter 2016 Earnings Conference Call and Webcast. We truly appreciate you 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. With me this morning is Luca Fabbri, the Company's Chief Financial Officer. I will now turn the call over to Luca for some customary preliminary remarks.

Thank you, Paul. First and foremost I would like to also welcome you to this conference call and webcast and thank you for joining us. The press release announcing our third quarter earnings was distributed yesterday evening. A replay of this call will be available shortly after the conclusion of the call through November 17, 2016. The phone numbers to access the replay are provided in the earnings press release. For those who listen to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, November 3, 2016 and have not been updated subsequent to this initial earnings call. During this call we will make forward-looking statements including statements related to the future performance of our portfolio, our identified acquisitions and farm properties under valuation, impact of acquisitions and financing activities as well as comments on our outlook for our business, rents and the broader agricultural market. We also will discuss certain non-GAAP financial measures including FFO, adjusted FFO, EBITDA and adjusted EBITDA. 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 third quarter earnings which is available on our website, www.farmlandpartners.com and is furnished as an exhibit to our current report on Form 8-K dated November 2, 2016. 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 yesterday after market closed and in documents we have filed with or furnished to the SEC. I would now like to return the call back to our Chairman and Chief Executive Officer, Paul Pittman. Paul?

Thank you, Luca. So, I'm going to make a few comments about the major events of the quarter, as well as a little bit about the state of the market. Starting with the major events of the quarter, obviously the most important event in the third quarter for this company was the announcement of the American Farmland and Company acquisition and merger. The power behind that merger is that with that, we have created what is the largest public company in the Farmland space, we have achieved significant scale on diversity through that acquisition plus several of the other acquisitions we have done; post to closing of this transaction which is expected to be in January 2017, we will have 850 million of assets, approximately 133,000 acres, approximately 100 separate tenants, we will have a portfolio that is approximately 75% primary row crops and about 25% specialty crops, meaning permanent trees, citrus, and nuts and vegetables. That is in our view the appropriate balance between traditional row crop agriculture and specialty crops. As we have always said, this story is really about global fruit demand in the face of land scarcity and this gives us a portfolio that on dollar-weighted basis reflects the approximate U.S. output of agriculture at the production level. That we want to avoid as a company, trying to pick winners and losers between almonds, and avocados, and corn, and beans, but to put investors into a broad, diverse and safe portfolio that represents that global food demand story. The transaction itself is highly accretive to the Farmland partner's shareholders. It is a 10% accretive in the first year, meaning 2017 and approximately 20% accretive thereafter. The real driver of that is significant cost savings that can be achieved from pulling the assets of AFCO into Farmland…

Thank you, Paul. In the third quarter of 2016 beyond announcing the merger with American pharma company, we acquired six farms in five states totaling 3,444 acres and put under contract 1,217 additional acres. Over the course of the third quarter of 2016, we were able to sell 147,600 shares of our common stock under our at the market offering program at a volume weighted average price per share of $11.22 and generated net proceeds of approximately $1.7 million. Now let me turn to our third quarter 2016 financial results. As I cover some of the key highlights please refer to our earnings press release for more details. For the third quarter of 2016 we recorded total operating revenues of $6.9 million and net income of $0.1 million. Basic net loss available to common stockholders was $0.06 per share, excluding the acquisition and utilization cost incurred in connection with the AFCO merger, net income and basic net income available to common stockholders on a per share basis would have been $1.7 million and $0.05 respectively for the three months ended September 30, 2016. Like many other rates, we look at certain non-GAAP measures particularly adjusted funds from operations or AFFO as additional measures for our performance. We calculate FFO funds from operations consistent with the definition provided by the National Association of Real Estate Investment Trust. The key adjustments we make to FFO to arrive at AFFO are to exclude non-cash expenses such as stock compensation, certain acquisition related expenses and distribution on the preferred units issues by our operating partnership. Up to and including the first quarter of 2016, we also made an additional adjustment in what calculation of AFFO and adjusted EBITDA to recognize revenue in the calendar year in which the cash rental payment was actually received…

We will now begin that question-and-answer question. [Operator Instructions] The first question comes from Jessica Levi-Ribner from FBR & Company. Go ahead.

Hi, guys. Ted Beachley here for Jessica. My first question is what pace of acquisitions can we expect pre-imposed AFCO deal? Will deals pick up in the fourth quarter as they usually do? Or will the AFCO deal kind of mute them?

I think what you should expect is that we will have a slightly slower fourth quarter than you might have expected. We obviously are a very acquisitive company, but when we digest the transaction of the scale of AFCO, it's a little bit like the rabbit through the python. So we obviously devote a lot of attention to getting that deal done. I would expect us to be acquisitive, but probably not the same rate you might have seen last year. Generally though, the more general acquisitiveness question, you should expect to see us continue to be very acquisitive as a company. One thing I want to point out though, that does not mean we are going to issue away a whole bunch of equity at some enormous discount to create a bunch of cash to buy farms. As I referred to in my prepared remarks, we've done $500 million of acquisitions in the last 12 months -- only approximately $50 million of those acquisitions were done with cash raised by equity sales on Wall Street. We were doing most of those transactions through creating structuring in the issuing of OP units, often at a premium deterrent market at the time we issued those OP units. So while we will continue to be acquisitive, we have no desire -- and as you all know I'm a large shareholder -- to destroy shareholder value through low-priced equity issuance.

Okay, thank you. And on different topic, I think you guys commented on this a little bit, but do you see any potential risk to land value in any one region or geography? And specifically, do you have any concerns with AFCO's land in California, which I believe you guys mentioned in the past. You've kind of had concerns over water. I was just wondering what your thoughts on that.

Let me take those in reverse. California first. AFCO's assets in California are of overwhelmingly high quality. The definition of quality in California is largely about water. Those farms were properly diligence. AFCO as a management team and their management structure was quite effective in finding good acquisitions. Their fundamental problem was they got trapped way too small as a public company and had an inability to grow with a relatively high SG&A drag on their revenues. We don't really have any concerns, but that is a very -- given the general issue about California and water is a good one, but on a property-specific basis through proper due diligence and buying in the right districts in the right locations. You can largely mitigate -- if not completely avoid that problem and we're pretty confident that we have done that with the AFCO deal. Turning to specifically the land values. My sense is intensely farmed regions that are very focused on primary commodities -- corn, soy beans and wheat in particular -- you will continue to see a gradual decline in land values from year-to-year until we see the farm economy recover. So first the reason for that is that the leading drivers of farm land value are farmers themselves and as their profitability as operators is hurt, they become less acquisitive, therefore drying up some of the demand. On the other hand, you are not seeing any significant number of distress sales. We don't anticipate seeing those sort of distress sales. What happens in the Farmland markets is when the economy is tough in a given region on the country for agriculture, you will see flat to very modest declines in land values until it recovers. Again, I want to emphasize what modest is. I keep reading these data sets about 10% down or articles about 10% down on all of this. We study this all the time and that's why a side of those USDA reports, no one doing a really broad survey of land values in any region at a country is finding any double-digit declines at all and it is actually rare to even find high single digits. My view was we would see 2015 to 2016 land values -- I think I've quoted in some of our earlier conference calls saying something like 3% to 5% down and we didn't even get that. So, our view is that you're not going to see significant pressure anywhere and importantly as a nationwide portfolio like we have today, we actually think you will see gradual increases in land values 2016 to 2017. I hope that answers your question.

And I would like to add to that that the resiliency of land values shouldn't be surprising, given the fundamental story behind farm values which is global food demand is completely unchanged and continues to progress. And the conditions of the farm economy had a relatively short term noise in the context of asset value. They are certainly to some extent hurting operators.

Let me actually pick up and add to that even though you didn't ask. The idea that these farmers are having a truly horrible financial result this year is also wrong. That is when people talk about farm income, what they're doing is they're pulling a statistic that's afforded by the USDA in particular out of context. When you say farmer income, what you're not saying is that somebody has analyzed all of the 1040s of the farmers and seeing what their income is. What they're doing is they're saying on average price for this year, multiplied by last year's production and last year's cost structure, the farmer profitability went up or down. That's what that statistic is. I can't believe the number of reporters. I don't seem to read the footnotes. It's not really what any of us on this call would think of as income. It's just a metric that they use. What's actually happening is farmer's input cost have gone down, their yields have gone up and there was a marketing window this year where people could sell corn at for example $4.25 and achieve a cash price of $4.25. We have many farmers amongst our 100 tenants who are having a relatively profitability year this year because the yields are huge. You're growing -- I mean everyone wants to talk about corn price, it's actually revenue and profit per acre that matters to the farmer and one of the reasons we're having lower corn price is that we're having a production that is in the neighborhood of 15% to 20% above norm. So you're not reducing true income -- meaning if you did look at the guide's true cash flow or 10-40 in any real significant way because you're making it up on volume even though corn price, bean price, et cetera is down. We can go on to the next question, I think.

Okay. The next question comes from Robert Stevenson of Janney Montgomery Scott. Go ahead.

Hi. This is Harsh [ph] on Rob Stevenson's team. I was just wondering if you had invisibility to dry powder post-transaction.

Yes. When we've done finished up this, dry powder, again remember my comment that we have unlimited dry powder. We can find parties that are willing to take OP units in transactions from us which we've been quite successful at doing. This company overall at $850 million of assets, we have probably acquired something in excess of half of those assets with OP unit-based transactions. We're actually pretty good and pretty effective at that, but as far as specifically dry powder post the acquisition with AFCO, they were less levered than we think is appropriate. We'll arrange some additional cash by putting additional debt on those assets. We've already got that one in place and committed to buy a lender and that will put us back in the ability to do something in the neighborhood of $30 million to $50 million of cash-based transactions if we choose to. That's the update there.

Thanks for your help.

The next question comes from Richard Scheeler of Baird. Go ahead.

Hey. Good morning, guys. My question is around the AFCO transaction. How is the integration of the company going so far and what ending would you guys say you're in in merging the companies and if you could do a refresher for me, or at least somewhat your G&A expectation as opposed to integration.

Sure. I'm going to answer this in a very general and high level and then I'll turn it over to Luca if you want to add any more specifics. Just again the baseline, everybody, both of these companies from a personnel perspective and a complexity perspective are small and simple. We have in the neighborhood of 15 or 16 employees. I believe American Farmland had 10-12. We are letting all one of their employees go in this transaction. So from this standpoint of integrating the personnel and all of that, it's not a particularly significant job. What that does mean is the duties and responsibilities of the AFCO employees who are going to leave, need to get transferred to our employees. That process is well underway and pretty easy to do, so I would say if you looked at it, given last night's events we'll say if you look at it like a baseball game, we're in the seventh or eighth inning of integration would be my sense of that. Obviously the last part of this can't be done until the acquisition actually occurs. In terms of the question about the synergies, on day one, we achieved essentially half of the synergies of the company, of the acquisition through the discontinuation of the employment of quite a few people in New York, the shutting down of the New York office, of AFCO, the outside law firm, outside accounting firm, all of those sorts of cost go away. There are some outside consulting agreements with a couple of parties that will take longer period of time to get out of and that's the second stage of accretion comes when we move beyond those third party consulting agreements.

Great, thanks.

Do you have anything to add on that?

No.

Okay. [Operator Instructions] Gentlemen, I'm not showing any further questions this morning. This will conclude our question and answer session. I would like to turn the conference back over to Paul Pittman for any closing remarks.

Thank you again for participating in our conference call. If you have any further comments or questions going forward, I want to make one mention and you'll be able to see this on our website in the coming days if it's not already there. We have a gentleman that works in our company named Clay Stockett that many of you have met in the past year and-a-half or two. He has been with us almost since the company went public. Clay has historically played the role, a lot of financial planning and analysis professional. We are shifting him into a role as an IR professional to give all of the investment community a key point of contact to get basic questions answered and to understand all reported information. So feel free to reach out of course to Luca, myself, but in addition, feel free to reach out to Clay in the coming months and years. He does -- because of the role he played with us, understand the financials and the prospects of the company quite well. I think it will be a good resource for everybody on Wall Street, so thank you. Thank you very much and look forward to talking with you next quarter.

The conference has now concluded.