Good day ladies and gentlemen, and welcome to the Gladstone Land Corporation’s Fourth Quarter and Year End December 31, 2016 Earnings Call and Webcast. My name is Brian and I’ll be your operator for today’s conference. At this time, all participants are in a listen-only mode. Following management’s prepared remarks we will host a question-and-answer session and our instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes. It is now my pleasure to hand the conference over to Mr. David Gladstone. Sir the floor is yours.

Thank you Brian, that’s a nice introduction. This is David Gladstone and welcome to the quarterly conference call for Gladstone Land. Thanks to all of you for calling in today; we appreciate you taking time out of your day to listen to our presentation. We always enjoy talking to you and hope to have some good questions from you at the end of this presentation. Please feel free to come by and visit us if you are in the Washington, D.C. area, we are located in a nearby suburb called McLean, Virginia. And if you have chance to come by, you’ll see a great team at work and we have about 65 members of the team now, we manage just over $1 billion in assets across all of our funds and companies. We’ll start now with Michael LiCalsi, he is our General Counsel and Secretary, he also serves as the President of Gladstone Administration, which is the administrator for all the Gladstone funds, including this one. Michael?

Good morning, everyone. Our report today may include forward-looking statements as defined in the Securities Act of 1933, the Securities Exchange Act of 1934, including those with regard to the Company’s future performance. And forward-looking statements involve certain risks and uncertainties that are based on our current plan, which we believe to be reasonable. There are many factors that may cause our actual results to be materially different from any future results expressed or implied by these forward-looking statements including all risk factors listed in our Forms 10-K and 10-Q which are filed with the SEC. And these can be found on our website, www.gladstoneland.com and on the SEC’s website, at www.sec.gov. This Company undertakes no obligation to publicly update or revise any of these forward-looking statements whether as a result of new information, future events or otherwise except as required by law. And in our report today, as a Real Estate Investment Trust we will discuss Funds From Operations or FFO. The FFO is a non-GAAP accounting term defined as net income, excluding the gains or losses from the sale of real estate and any impairment losses, plus depreciation and amortization of real estate assets. The National Association of REITs has endorsed FFO as one of the non-GAAP standards that we can used in discussion of REITs. We also discussed two other FFO measures, one would be core FFO or CFFO, which adjusts FFO for certain non-recurring charges such as acquisition-related costs. And the second is adjusted FFO or AFFO, which further adjusts CFFO for certain non-cash items, such as converting GAAP rents to cash rents. And we believe these metrics improve comparability of our results period-over-period. And to stay up-to-date on the latest news involving Gladstone Land and our other affiliated public funds, please follow us on Twitter; username GladstoneComps and on Facebook, keywords, The Gladstone Companies. And please also go to our general website to see more information about this fund and our other affiliated publicly traded funds at www.gladstone.com. Now today’s reports from our President and CFO will be an overview of our operations and performance. So we encourage everyone to read yesterday’s press release and Form 10-K filing which includes a wealth of information for our investors, and you can find them all in our website, gladstoneland.com. Now, I will turn the presentation back over to David Gladstone.

Okay Michael, thank you. We ended 2016, as you all saw in the numbers yesterday, on a very note and continue the momentum, I think, so far in 2017. 2016 marked the biggest year and today for – in the form of acquisitions and January right after the year-end we closed our largest single acquisition. And let me say this, before I get started say a few details about the events that we have. I’d like to give a brief overview of the nature of our business. As you all know our business consist of owning high-quality farmland and leasing it to top tier farmers. We don’t farm any of the land ourselves, and thus we don’t take any direct farming risk. And many of the farmers that rent our farmland buy crop insurance from the Federal Government so to protect them against potential losses. So if their crops fail, the farmers who buy the insurance can get back enough money to plant the next year’s crop and that benefits us as well. And so thank you very much to you as taxpayers for helping with that insurance. We are extremely selective in our investments and we are proud of ourselves only acquiring the best farms and leasing to the best farmers. Our investment focus is in farms located where farmers are able to grow a variety of high value annual row crops such as berries and vegetables. We usually, only purchase irrigated crop land with great soil and plenty of access to water, and partially because of this almost all the geographic regions where we have farms located, continue to experience steady income increase, as well as underlying values of the stock. And the rents that are charged on the land continue to go up. As evidence of this…

All right, thank you David and good morning everybody. I begin by discussing our balance sheet. During the fourth quarter our total assets increased by about $18 million or 6% mainly due to our new farm acquisitions, which were funded primarily with a combination of new fixed rate borrowings and new OP unit issuances. During the quarter, we incurred an additional $30 million of new long-term borrowings and expected weighted average effective interest rate of 3.16%. And these rates are fixed for the next ten years. We also amended our credit facility with our largest lender, MetLife. Through the amendment we increased the overall size of the facility to $200 million and we reduced the interest rate on about $86 million of term borrowings by 19 basis points, resulting in annual savings of over $163,000. The new rate on all term note borrowings under the MetLife facility is now 3.16%, net rate is fixed for the next 10 years, as well. And subsequent to quarter end we obtained an additional $32 million of new long-term borrowings at an average interest rate of 3.3% and these rates are fixed for the next three years to seven years. From an overall leverage standpoint, using the fair value of our portfolio and including our term preferred stock into debt bucket, our loan-to-value ratio was 59% at December 31. And we’re comfortable at this level given the relative low risk of farmland as an overall asset class. While interest rate volatility remains a concern of ours, over 845% of our total indebtedness is currently at fixed rates and on a weighted average basis these rates are fixed for another seven years out. So we believe we are pretty well-protected on the debt side against any near-term interest rate hikes. The overall weighted average effective…

Very good, very good Lewis. This company just continues to get better every quarter as we continue to execute our plan. We’ve invested over $350 million in new farms since 2013 and expect to continue adding to that figure as our backlog remains very strong. Currently we have three properties and it’s worth about $42 million to be purchased these are under signed letters of intent, that means we’re going to close them, but it does mean we’ve got a pretty good close view of what’s going to come in. Some of these purchases will involve the issuance of additional OP units, in consideration that’s becoming very popular for some of the buyers, but we also are looking to issue perhaps some preferred stock to cover the equity portion. So please stay tune as we try to figure out the best way of solving the acquisition problem. As you know, with an increase in the number of farms we own becomes greater diversification and a protection for investors we also expect better earnings. However, we still continue our due diligence process on these properties, that I just mentioned, the three. And there’s no guarantee that any of them will close, but my best guess is that they will. As most people know, our funds specialize in farms that grow fresh fruits and vegetables and we have historically avoided investing heavily in farmland that grows traditional commodity crops such as corn and wheat. One reason for this is we believe investing in farmland growing crops that contributed to a healthier lifestyle such as fruits, and vegetables and nuts. In addition, more than 90% of our portfolio is GMO-free and we are continually expanding our ownership in organic farmland both with new acquisitions, as well as converting some of the existing farms…

Thank you sir. [Operator Instructions] Our first question will come from the line of Rob Stevenson with Janney. Please proceed.

Hi good morning guys. David how are you thinking about the common equity today? I mean, I know in your remarks a few minutes ago you talked about the discount to NAV. But REITs generally trade at discounts to NAV, and Microcap REITs generally trade at wider discounts to NAV. You guys have had a heck of a run in the stock price, over the last 12 months. And $12.50 is a lot better than the $8 that was trading at year ago. How are you thinking about as you look to finance the next batch of acquisition? Common equity would not only get you larger market cap, but greater quantity as well and solve some other issues. A 14% discount to NAV doesn’t seem all that huge given where REITs normally trade. How are you guys sort of contemplating that internally versus preferred?

Well, thank you Rob for being a great supporter of ours. We appreciate all of that. And I guess I’m just averse to taking dilution when I know the real underlying values. But we haven’t ruled it out. But on the other hand we’ve talked about some convertible preferred might get us a much lower coupon, which would be very delightful for us to have. I know common is the lowest coupon we could probably get at 4.1%. But again it’s always a balancing act and we look at this as we look at everything. What do we think is going to be best for our shareholders over the long-term? We haven’t ruled out anything just been thinking about these and not quite ready to pull the trigger, but I know when we do we’ll be calling your firm for help on this.

Okay. And of the three properties for roughly $42 million that you talked about having under letter of intent at this point, how substantial is that OP unit or would that OP unit issuance be, is it 10% or closer to 50? I mean not exact numbers but help me understand sort of how much of a magnitude that OP unit contribution could be on that $42 million purchase price if you go ahead with those deals?

It’s closer, a little less than 10% at this point in time and it changes as people warm up to the idea of having a tax-free exchange. So we’ll just have to wait and see when those finally close, what that number is. And the nice thing about the OP units is they’re usually at a higher price than the current price of the stock. So we’ve been able to avoid some dilution by having OP units that are higher strike price when they convert to common. So we like that and we like to sell more of it but a lot of people like cash as opposed to OP units.

Okay. While we’re on the subject of OP units, Lewis, I mean, how much – have you seen any substantial amount of OP units converted into common in order to sell of the deals that you’ve done over the last couple years?

None have been yet. We haven’t quite reached the one year marker when we issued our first OP units is coming up soon. But we’re not expecting, definitely not significant amount if any at all to be converted.

Okay. All right thanks guys I appreciate it.

Okay, next question.

Thank you. Our next question will come from the line of James Fishman [ph] with [indiscernible]. Please proceed.

Good morning. I have two quick questions. Also on the OP units, do they receive the same distribution as the common?

Yes. Yes they do.

Okay. And my second question is on Seeking Alpha, there was a posting on January the 11 which was reviewing LAND quite favorable article. And somewhere in the comments there was a comment from one David Gladstone, and I just wanted to confirm that that was actually you Mr. Gladstone and not someone impersonating you.

That’s true.

Okay, thank you

Next question.

Thank you. Our next question will come from the line of John Massocca with Ladenburg Thalmann. Please proceed.

Good morning every one.

Good morning.

So can you kind of walk us through maybe the genesis of the South Florida acquisition you guys did in the first quarter here? How did you guys come about that opportunity? And are there any other opportunities you think out there kind of once you – kind of sort out your capital stack to do further kind of larger acquisitions like the one in South Florida?

That was a unique situation from a farmer that we’ve known for a long time. We are very active in Florida. Bill Frisbie here in the office, I think, spends more time in Florida than he does here because he’s down there working with the farmers. So we know lots of farmers there. In addition many of the farmers in Florida are the same ones that are in California which we’ve known for many years and have competed with them when we own strawberries, strawberry farming. And so as a result, there is a group of farmers that see us as a tremendous benefit for them as a way to get liquidity in the land that they own, put it into the business part where they earn much more than they could if they were renting the farms out, for example, and as a result they’re warming up to the idea that we can be their long-term partner. And in fact will sign very long-term leases should they want those. And that one happens to have a pretty long-term lease on it with the extensions.

Okay and then kind of that.

The second part of that question, is are there other large transactions? Yes some of them are in California and are very large and others are more in line with what we do. I think the worst thing we’d want to do is get one or two very large farms and put ourselves at risk, because when we started this our only tenant on day one was Dole. And so we felt a little bit uneasy there although I’ve known the Dole people forever in a day and they’re good people. You just never want to have so much in one area. So we’ve been careful in trying to have a diversified tenant base where we have no relationships with them other than those tenant relationships. So again, I think, there’s opportunities out there in fact I know of several very large ones, but we’re not going to try to take those on until we become much larger

Okay, that makes sense. And then somewhere in that same vein, that’s recent USDA survey that came out there have been some kind of suggestions amongst the analysts who have been reading it that there might be some consolidation going on in the farming space. Are you guys seeing that amongst tenants or potential tenants? And do you think there’s this consolidation should provide acquisition opportunities for Land?

The consolidation started many years ago in the Midwest as a farmer used to be able to make a living on a 100 acres. Now if they don’t have 3,000, 4,000, 5,000 acres, they can’t make a living on that in the Midwest. And it’s transferred into all the other areas. For example, in the strawberry business there are three or four very large strawberry growers. And as a result of that they dominate the main places that strawberries are sold which is the grocery stores and the big box grocery stores as well. So as a result, I think, this is just a natural thing to happen. And we want to take advantage of that by being the real-estate part of those transactions. For example, if farmer A wants to buy farmer B, he may not have the money to do the farm but we could easily buy the farm and he can buy the business and we’ve done several of those transactions. So I think we’re a helpful catalyst in helping this happen. It’s happening in large part in the Midwest because some of the farmers are just not making a living, they’re actually losing money. And I think someone told me this year that generally corn farmers are losing $100 to $200 an acre. I think they make it up in some of the other crops, but it’s really rough times for them and lot of the banks are now not lending as much as they used to in the Midwest. This is not true in our farming areas, California, and Arizona and Oregon are still very strong on the West Coast and certainly Florida and moving up the East Coast there’s some very strong farms, who are hopeful of buying a few farms in three or…

Okay that’s it for me thank you much.

Okay next question please.

Thank you sir. [Operator Instructions] I’m showing no additional questions at this time. So now it’s my pleasure to hand the conference back over to Mr. David Gladstone for closing comments and remarks. Sir?

Okay thank you very much. We appreciate you all tuning in. And we’ll see you next quarter. That’s the end of this conference call.

Ladies and gentlemen thank you for your participation on today’s conference. This does concludes the program you may all disconnect. Everybody have a wonderful day.