Good day, ladies and gentlemen, and welcome to the Gladstone Land Corporation’s Second Quarter 2015 Earnings Call and Webcast. At this time all participants’ lines on the telephone are in a listen-only mode. But later, we will be conducting a question-and-answer session and instructions will follow at that time. [Operator Instructions]. As a reminder, this conference today is being recorded. I would now like to turn the conference over to David Gladstone. You have the floor, sir.

All right. Thank you. And welcome to the conference call for Gladstone Land. This is David Gladstone. And thank you Andrew for that nice introduction and thanks to all you people we have on the line today and we appreciate you calling in. And we always enjoy this time that we can be with you. Hope we have a lot of good questions at the end. We wish we had more time to be with you. But this is sort of once a month once a quarter I mean that we do this. By the way if you’re ever in the Washington DC area, we’re located in a suburb nearby called McLean Virginia. And if you have a chance come by and say hello. You’ll see a great team at work here. We have about 60 members, many more on the road. So, we’re no longer a small business, we have about $1.8 billion in assets across all of our companies. So we’ll start now with Michael LiCalsi. He’s our General Counsel and Secretary. He also serves as a President of Gladstone Administration which serves as the Administrator to all the Gladstone funds including this one. 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 SEC. And these can be found on our website at www.gladstoneland.com and on the SEC’s website 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. And we’ll also be discussing core FFO or CFFO which adjusts FFO for certain non-recurring charges and adjusted funds from operations or AFFO, which further adjusts CFFO for certain non-cash items. And we believe these metrics improve comparability of our results period-over-period. Please review our quarterly report on Form 10-Q filed yesterday with the SEC for a more detailed description of each of FFO, CFFO 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 yesterday’s press release and the Form 10-Q which includes a wealth of information for all of our investors. And you can find them all at our website gladstoneland.com. And to stay up-to-date on the latest news involving Gladstone Land and our other affiliated publicly traded funds please follow us on Twitter, username GladstoneComps; and Facebook, keywords, The Gladstone Companies. And you can go to our general website to see more information about this fund and our other affiliated publicly traded funds at www.gladstone.com. And now, I will turn the presentation back to David Gladstone.

All right, thank you Michael. It’s nice to have a good lawyer tell our listeners about the warnings of any reports from public companies. And we aim to follow all the government guidelines in this area. Before we get into the results of the quarter ending June 30, I’d like to give a brief overview of the market environment and the nature of our business for all of our listeners out there. Our business consists solely of owning farmland and leasing it to independent and corporate farmers. These independent farmers are large, not the small farmers. They’re usually in the top 20% of the largest and best farmers in any of the farming areas that we go into. We don’t farm any of 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. There has been some recent media coverage about declining values of Midwest farmland that’s growing corn and other grains. And that includes many of the geographic areas that grow corn such as Virginia and North Carolina. But please know that we’re not in that area except one small farm, the corn sector is just not part of our primary focus. However, land values in regions in the Midwest where we’re currently looking seem to have hit bottom which may provide a good opportunity to buy some farmland. But if we buy farmland say in Nebraska for example, we’re backed farmers growing produce like potatoes and onions on almost every farm we have, the tenants are growing items that you’d see in the produce section of the grocery store. That is our specialty. I know the produce area because I used…

All right, thanks David, and good morning everybody. I’ll begin our discussion with our portfolio activity and the balance sheet. We acquired two farms in a single transaction during the quarter, adding about $16 million in new assets to our books. These farms, both in Moakley and Florida are crop land farms for miscellaneous vegetables and were acquired at net cap rate and that’s rental income, net of any property expenses that were responsible to cover such as property taxes of 5.6%. The lease we put in place with acquisition runs for five years and includes two five-year renewal options. We also renewed three leases during the quarter, all of which were set to expire in 2015, at an average increase in straight-line rents of over 9%. And coupled with the lease we renewed during the first quarter which resulted in 33% increase in rent, we believe this underscores the trend we’re in areas where our farms are located. And asset demand for prime farmland such as ours as well as the value of such farmland and the rents the command is continuing to increase. And this sentiment seems to be shares by the tenant farmers in these areas as well. We have no more agricultural leases coming due in 2015 and only one said to expire in 2016. The lease on the Salinas, California property we acquired this past January comes due in October 2016. We’ve begun negotiations with the current tenant and we expect to be able to renew the lease in an increased rate without any downtime. And on to our balance sheet. During the second quarter, our total assets increased by $17 million or about 10% and that’s primarily due to new farm acquisitions, which were funded primarily for our follow-on offering. Also during the quarter,…

All right, Lewis, thank you very much. Good report. Main report this time is to tell you that we are continuing to execute our plan. We invested $143 million in new bond acquisitions and the IPO and we have several other deals in the pipeline that we expect to close in the coming months. With an increase in the portfolio of farms comes greater diversification and protection for investors and we also expect better earnings. We expect many of the farms we acquired to be purchased from farm owners that do not farm the property but rather lease the property to the farmers, about 38% of farms in the United States owned by individuals but not farmed by the owners, they rent them out. In those situations, we just intend to put in our leases as soon as that lease expires and simultaneously with the acquisition just bring them under the roof here, and continue to work with them. In addition to the drought in California and other question people ask us is, why we’re not in hard grains like wheat and corn, and the reason is prices are very unpredictable. For example, corn can be about $3.60 a bushel and the go as high as $8.50 a bushel as it was three years ago. Price of corn has been under $4 for the last three years and farmers just don’t make any money with corn at under $4. We stay away from corn because large variations in price and people always say they can store grain but it’s very expensive and you have to sell it at some point, you can’t keep it dry and protected for long-long periods of time. And in terms of economic outlook, we think farmland has performed extremely well in the past 10 plus…

[Operator Instructions]. Our first question for the day comes from the line of John Roberts from Hilliard Lyons. Your line is open.

Good morning, David.

Good morning, John.

Given, in your sort of correlated to the same question I asked you on the commercial call, given the current stock price, it would seem to be somewhat constraining on your ability to raise capital I mean given your last offering was what $0.49 dilutive. I would assume you wouldn’t want to do a whole heck of a lot more offerings in here. Any thoughts on what you’re going to do for capital beyond the $42 million you’ve got in buying power?

I think the $42 million is going to allow us to move forward pretty strong. And then we do have some people that have evidenced the desire to take up REIT shares, we haven’t done any of that. So we’re hopeful not to do a lot of that as well. We are planning to take a look at the ATM program to see if we can put smaller amounts of stock out rather than doing large offerings. But at the end of the day, some point in time, maybe sometime next year we’re going to have to raise money. And we don’t want to do it at this price. And so we may have to take a little vacation in terms of doing deals if that’s what it takes. We can’t keep this kind of dilution the $0.48 hurts a lot. But at the same time you’re going to see the $0.48 go away from the appreciation of the properties. So, from my perspective it was not a good thing to do but sort of a necessary evil. You’re right it is constraining.

Yes, yes. Any thoughts on non-traditional stock proffered etcetera?

Well, unfortunately we like to do some proffered it’s very expensive. But we’ll consider that proffered trading at maybe 6.5% and pretty much eat up most of the profits that we’d be able to make with that. But with the proffered that we could take out say in two or three years, that might be a way of looking at the world of paying a little higher price for our equity in terms of what we had to pay in the past. And at the same time keep things rolling along. But you’re right on target, we have to use - not use our common stock but use some proffered in order to keep the growth going.

Yes, I guess, unlike some of the others where your yield on investments is a little higher because the yields on these farms are so low, it would make proffered a little more difficult?

Well, it’s not that difficult. If you use proffered and you were getting 6% or 6.5% for your proffered and you’re getting return on equity which the proffered would be counted as 8% to 10%, there is a spread. It’s just a much smaller spread.

Right. Okay. Thanks, David.

You’re welcome. Next question.

Our next question comes from the line of Rob Stevenson from Janney Capital Markets. Your line is open.

Hi, good morning guys. David, in addition to the three farms that you have under purchase agreement and letter of intent, I mean, what’s been the sort of magnitude of the deals that you’ve looked at over the last three, six months. And if you had a stock price that was closer to your NAV, I mean, how much opportunity are you seeing out there returns that are acceptable to you guys to be able to buy on a quarterly basis?

Yes, we see a lot of farms and quietly frankly we, just for an example, we turned down one of the blueberry farms that somebody else did simply because it was a very poor farm with not a very good farmer. So we’re just, Rob, at this stage of our growth, we can’t make any mistakes, I can’t get on the phone and tell you and others that one of our farms is not working the way we thought it was going to work. And that’s an exception. We’re just going to make every one of them count. Once we get up around $400 million to $500 million in assets, I think we can take a few more risks. We are looking at other areas. As you know, we opened the office in the Midwest, we now have three farms that we’re looking at, I think two of them will close. And so, we’re starting to see some things in the area, the area in the Midwest is quite a bit different because it’s mostly very staple oriented that is potatoes, onions, carrots, those kinds of things are grown in the Midwest, at least as far as we’re looking at we’re not looking at the corn farms or the wheat farms for that matter. But the bottom line is as we open that up, that will produce more. We’re still seeing plenty of farms in Florida and California, and in addition we are looking at some different crops. We’ve been offered some opportunities to go into the three areas such as nut farms, which are very good right now. I don’t know what we’ll do but we’re looking at a lot of different things. And quite frankly I have not been pushing as hard to get things close simply because the stock price is so low that I was worried that we would run out of money. So, we’ve been more particular than we would be. I would expect that instead of $30 million we could probably do $60 million pretty easily if the stock price was right.

Okay. And then, thoughts on what you’re seeing from a - just from a competition for the better deals, I mean, Oracle in the journal yesterday about TI crops fund of decent size, I mean, not only targeting U.S. but other markets as well. But how much in another public company that could be coming out etcetera, I mean, what are you seeing when you go out there and you’re looking for deals in your sort of core markets, how competitive is it today?

Well, most of the folks that are in the public side of the business are doing corn and grains. And so we’re just not seeing them at all other than the one blueberry farm I mentioned. But there is a listing for another public company that is pretty much all over the board in terms of things that they’re doing, and pretty good folks there. They’ve got plenty of money so they will continue to grow. But they’re doing a lot of development deals. And a development deal would be something like taking 200 acres and that don’t have anything on them that is it was probably unused farm and trying to change it into a farm by planting trees on it and say nut trees. Those nut trees won’t start producing for three to five years, so they don’t have any income in the early years. However, later it would be a big up-charge in terms of the amount of stock that’s coming in. So, we don’t do development deals, I would love to do some. We see them around but quite frankly again, we are very dividend driven. So as a result, we’re only looking at things that will increase our dividend. And as far as TI craft, is concerned, we’ve seen them mostly go overseas. They’re heavy in a lot of different countries, for example in Latin America and Australia as well as in I think there is some in Africa as well. We haven’t seen them that much in the United States although they have a lot of properties that they own in the United States. They were selling some trees in California, I think they were worried that those trees were in the valley and they wanted to get rid of them because of the…

All right. And then just lastly, you expressed trepidation about issuing OP units, is that just the same issuing stuff at 20% discount NAV or is there something about the structure that troubles you?

No, it’s not the structure. You may remember we were on the board of Capital Automotive REIT. We issued a lot of up REIT shares and it worked extremely well. I think the problem was offering up REIT units right now is the fact that our stock price is so low, I mean, if we could offer up REIT units convertible at $15 a share, we do it all day long. But issuing it at under $10 and so far of the net asset value, it’s the same thing as offering stock. So we haven’t been pushing the OP units. And I think at this size, and the farmers we deal with are not small farmers. These are very sophisticated knowledgeable farmers. They want to know that we are big strong company and at couple of hundred million dollars in assets, we look big to a lot of people but we’re actually small as you know when it comes to other real estate investment trust. So, it’s a little bit harder to convince a farmer like and I’m sure we’ll never be able to convince Dole or some of the other large farmers that up units would be something they should own.

Okay. Thanks guys.

Next question.

[Operator Instructions]. And that looks like all the questioners that we have in the queue for today. So, I would like to turn the call back over to Mr. Gladstone for closing remarks.

All right, thank you all for calling in. I would see you again next quarter. And that’s the end of this call.

Ladies and gentlemen, thank you again for your participation in today’s conference. This now concludes the program. And you may all disconnect your telephone lines at this time. Everyone have a great day.