Good day, ladies and gentlemen, and welcome to the Gladstone Land Corporation's First Quarter Ended 3/31/15 Earnings Call and Webcast. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, today’s conference call is being recorded. I’d now like to introduce your host for this conference call Mr. David Gladstone. You may begin sir.

All right. Thank you, Kevin. That was a nice introduction. This is David Gladstone. I am the Chairman of Gladstone Land. And I want to thank you all for calling in. It's always nice to have a call with our shareholders and we enjoy having these calls. Really wish there was more opportunity to communicate, but we do this once a quarter, so hopefully that’s enough. If you're in the Washington DC area, please come by and visit us, say hello, we are located in a suburb called McLean, Virginia and if you have -- and you do have an open invitation to stop by and see us here. You will see a great team at work. It’s about 60 members now, the team -- no longer a small business, even though this fund is relatively small. We have about $1.7 billion in assets across all of our Company. So we'll start now with Michael LiCalsi. He is our General Counsel and Secretary. He also serves as President and Administrator. Michael?

Good morning, everyone. This report you are about to hear may include forward-looking statements within the meaning of the Securities Act of 1933, and the Securities Exchange Act of 1934, including statements with regard to the future performance of the company. And these forward-looking statements involve certain risks and uncertainties that are based on our current plan, which we believe to be reasonable, and 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 of the items listed under the caption Risk Factors in our Forms 10-K and 10-Q that we filed with the Securities and Exchange Commission. And these filings can be found on our Web site www.gladstoneland.com and on the SEC's Web site at www.sec.gov. The 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 or REIT, we plan to discuss funds from operations or FFO. 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 or NAREIT has endorsed FFO as one of the non-GAAP accounting standards that we can use in discussion of REITs. We will also be discussing adjusted funds from operations or AFFO, which we define as FFO adjusted for certain non-cash items and nonrecurring charges which we believe makes it a more useful comparison metric period-over-period. Please review our quarterly report on Form 10-Q filed on Friday with the SEC for a more detailed description of both FFO and AFFO. The report from our President and CFO, that you are about to hear is an overview of our operations and performance, and we encourage all listeners to read Friday’s press release and the Form 10-Q which includes a wealth of information for all of our investors. You can find them at our Web site gladstoneland.com and in the SEC's Web site as well. 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 you can go to our general Web site to see more information about this Company and our other affiliated publicly traded funds at www.gladstone.com. Now, I’ll turn the presentation back to David Gladstone.

Okay. Thank you, Michael. Good report. We have another nice quarter to report to shareholders, but before I get into the results, I always like to give a brief overview of the nature of our business for any new listeners. Our business consists solely of owning farmland and leasing it to independent and corporate farmers. We don't farm the land ourselves, and thus don't take any direct farming risk. Almost all of the farms we own are concentrated in locations where farmers are able to grow high value annual row crops such as berries and vegetables. If you're in the grocery store and you go by the fresh produce section, you will see the type of crops that our farmers are growing. There is some media coverage recently about the decline in values in Midwest farmland that is growing corn and other grains. However, that sector is not part of our primary focus. However, I’d say that as values become lower in the Midwest, it does provide a nice buying opportunity for grain farmland. Geographic regions of our fruits and vegetable farms are located, in steady appreciating areas; both the underlying value and the rents charged on the land. This is evidenced by the several strong lease renewals that we have executed recently, which we will touch on in just a minute. I’d like to dispel people’s concerns regarding the drought in California, its effect on the water availability of our farms. There is a drought in parts of the State where all of our farms have wells on site and so far the wells are doing fine. And a number of communities where we have farms like Watsonville, California have large processing plants that take the affluent from the city and convert it into potable water that can be…

Sure. Good morning, everybody. I'll begin the discussion with our portfolio activity and then the balance sheet. We acquired two farms during the quarter, adding about $21 million in new assets to our books. Our Salinas, California, property was acquired at an NOI cap rate of 4.6%. However, if you figure in the finder's fee that our adviser earned and credited back to us, the effective cap rate increases to 5.6%. The lease we assume with this acquisition expires in October of 2016, and we expect to [indiscernible] to renew this lease at a significantly higher rate by that time. Our second acquisition in Duette, Florida currently has a cap rate of 6.4%. However, one certain capital order improvements are made on the property and we began earning additional income on these improvements to cap rate share increased to about 6.7%. We expect these improvements to be in place before the second lease year begins. Coming into the year, we had three leases yet to expire in 2015, and we have renewed them all at an average increase in straight-line rents of over 9%. Furthermore, one lease coming due in 2016, which we have already renewed at a 33% increase. Coupled with our 2014 lease renewals, which averaged more than 25% rent increases, we think this underscores our belief that demand for prime farmland such as ours, as well as the values of such farmland is continuing to increase in areas where our farms are located. And this sentiment seemed to be shared by tenant farmers in these areas. We have no agricultural leases coming due in 2015 and only one set to expire in 2016 and that's from the Salinas, California property we just acquired in January. Okay, on to our balance sheet. During the first quarter, our total…

That was a good report, Lewis. The main point of this report is to tell you the [technical difficulty] the plan that we talked about so many times. Invested over a $127 million in farm acquisition since our IPO, and with the closing of the recent offering, we now have the ability to acquire more farms over this summer. With the increase in portfolio of farms comes greater diversification and protection for investors, we also expect better earnings as evidenced by recent increases in our monthly distribution. We anticipate that many of the farms that we purchased will be acquired from farmers, or agricultural companies, and that they or another farmer will simultaneously lease that farm from us, so we don't have any downtime. We also expect that many of these farms we acquire will be purchased from farm owners that don’t really farm the property, but rather lease the property out to the farmers. A lot of the farms in the United States are owned by individuals, but not farmed by the owner, and they rent that land to different farmers. In situation such as these, we intend to put our lease in place prior to or shortly after acquiring the farm. Points to make here in addition to the drought in California, another question many people ask are why aren’t we investing in corn and other hard grains? And the reason is prices are very unpredictable. Corn was about $3.90 recently and that's per bushel. Now it was as high as $8.50 a few seasons back. We don’t like these huge variations in prices that are all really happening because of international things that go on. If the Ukraine has a grain crop, it hurts the prices in the United States. We can't store grain, but that's very…

[Operator Instructions] Our first question comes from Amit Nahawli with Oppenheimer.

Good morning.

Good morning.

Are you guys able to provide any guidance going forward for AFFO and G&A?

No, we haven't done that in the past. We stayed away from that. When you are small like this, it's almost impossible to do that, because every transaction has a very material impact. In fact, some of the farms that we buy, we actually have to notice out to shareholders before we even buy them, because of the potential impact. So no AFO, FFO or any other kind of guidance, I'm very sorry to say.

Okay. And just going back to your pipeline, correct me if I’m wrong, you mentioned eight farms with $64 million of letter of interest?

Yes, with four of those have signed letter of intents and are proceeding to sign up the purchase agreement, which will mean that the certainty of clause becomes much higher.

Got it. Are you able to discuss or mention now the location or the expected cap rates?

Oh let’s see, I think I have a little bit of information on that, we might be able to share. What do you say Lewis? We’ve got -- we have the …

The ones that are executed otherwise were in Florida, Georgia, and California.

We have two in Florida, and one in California and one in Georgia and then the -- there is two others -- a couple of others in different areas after that, that we don't have a signed letter of intent.

Okay. And just lastly are you able to provide some color on the credit quality of the tenants?

Most of the tenants that we have are the best growers in those regions. We don't deal with them. This is usually the top 20% of the growers in the areas. So we are very conscious that the best growers are the people to go with. Most of them have pretty good sized balance sheets and income statements. Every now and then we will take on a smaller farmer that has good ratings by other farmers in the area. I would say that most farms as you can imagine, I don't think there is anyone other than Dow [ph] that has a credit rating and Driscoll may have one now, but I'm not sure. The credit ratings of farmers has never been one that Standard and Poor's and others have gone out and done credit ratings on it. We do internal credit ratings and the credit ratings tend to be in the BB range, sometimes as a B, but that tends to be the range simply because these are small business -- smaller mid sized businesses.

All right. Thank you. That's it from me.

Okay. Next question?

Our next question comes from Rob Stevenson with Janney.

Hi. Good morning, guys.

Good morning.

David, can you talk a little bit about you have alluded to in the past, and alluded to on this call about looking at Midwest grain farmland when the price gets cheap enough. May I know how far away are we from being sort of cheap enough and sort of what are the catalysts that you’re really looking forward to be able to pull the trigger on one of those deals?

If we thought a farmer could make money at the rate we would have to charge them for buying the farm, then we would be interested. Right now they are paying fairly high rents. The rents haven’t moved down as much. The price of farmland has moved down, but the rents on existing farms I know there is a lot of negotiations going on out in the farm belt right now with regard to what the farmers are willing to pay. And just by the way most of the farmland in the Midwest is an annual renewal. So when there is a bad year, the farmer comes in and ask for a discount on rents and we’re seeing farmland rents drop pretty much down 8% to 12%. So from my perspective, when the economics work, we would be interested in looking at that, but it's just not there right now.

Okay. And Lewis, can you talk about what you see -- have you seen any changes in pricing on the Farmer Mac stuff in the last 30 days with the volatility in interest rates?

We’ve been -- we're going very -- the last one we have with them is back in January, and rates have come down since 12/31 about, let's say 20%, but we haven't gone back to them with any new debt for pricing yet.

Okay. I mean, is this -- so you think that today you would be pricing inside of where you price the last deal?

Yes, we believe so.

Okay. And is there -- I mean, what's the -- in terms of at this point of the year, I mean is that for them -- is that do you have any sense as to where they’re in their book yet?

Well, all of the stuff is pass-through. They near -- they batch it up and sell it off into the marketplace. So it's really just whatever the market has for them and right now it seems to be still very good for [indiscernible].

Okay. Thanks guys.

Other questions?

[Operator Instructions] And I'm not showing any further questions at this time. I’d like to turn the call back over to our host.

All right. Thank you very much, and thanks to all of you who called in and those of you’ve listened -- who were listening to this. Again, we are in great shape today and I expect this quarter to be a good quarter and the rest of the year to be a good year as well. That's the end of this conference call.

Ladies and gentlemen, that concludes today's presentation. You may now disconnect and have a wonderful day.