Ladies and gentlemen, thank you for standing by and welcome to the Gladstone Land Corporation’s First Quarter Ended March 31, 2020 Earnings Call and Webcast Conference. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today Mr. David Gladstone. Thank you, sir. Please go ahead.

Okay. Thank you, Dexter. Nice introduction. This is David Gladstone and welcome to the quarterly conference call of Gladstone Land and thank you for calling in today. We always appreciate taking some time to talk to you and listen to the presentation that we have and hopefully we will have some good questions at the end. We always start with Michael LiCalsi. He is our General Counsel and Secretary. He is also the President of Gladstone Administration, which is the administrator for all the Gladstone funds. So, Michael, take it away.

Thanks, David, and good morning. Today's report may include forward-looking statements under the Securities Act of 1933 and the Securities Exchange Act of 1934, including those regarding our future performance. These forward-looking statements involve certain risks and uncertainties that are based on our current plans, which we believe to be reasonable. Many factors 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 in our Forms 10-K, 10-Q and other documents that we file with the SEC. You can find all these on our website, which is www.gladstonefarms.com, specifically the Investor Relations page, or you can go to the SEC's website and that’s www.sec.gov. And we undertake 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. In today’s discussion, we will discuss FFO, which is Funds From Operations. 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 from property, plus depreciation and amortization of real estate assets. We will also discuss core FFO, which we generally define as FFO adjusted for certain non-recurring revenues and expenses, and adjusted FFO, which further adjusts core FFO for certain non-cash items, such as converting GAAP rents to normalized cash rents that we believe these are better indications of our operating performance and results and allow better comparability of our period-over-period performance. We ask everyone to take the opportunity to visit our website, once again, gladstonefarms.com, sign up for e-mail notification service, so that you can stay up-to-date on the company and everything that goes on. You can also find us on Facebook, keyword there is The Gladstone Companies, and we’re even on Twitter and the handle there is @glatstonecomps. Today's call is simply an overview of our results. So we ask that you review our press release and Form 10-K, both issued yesterday for more detailed information. Again, you can find them on the Investor Relations page of our website. And with that, I'll turn the presentation back over to David Gladstone. David?

Okay, thank you, Michael. Much like last year, by the way, was a terrific year for acquisitions. 2020 has begun from an acquisition standpoint, just getting off to a slow start. However, we do have another strong quarter operationally and the team continues to have success with lease renewals and continue to be able to renew leases on our existing farms at increased levels. We believe these increases in rental rates are indicative of the strong demand for the company's farms and are also signs of continued appreciation in the value that we're seeing in the farms that we own. Now, just to touch on the impact of all the government closings that seems to be top of mind of everybody where – and in just a few words, the closings are not having a significant impact on our farmers and tenants and this is because about 90% to 95% of the produce grown in our farms are sold to grocery stores like Kroger and Safeway and Costco and Walmart and similar outlets. Very little of the produce is being sold to food servicing industry, including restaurants and institutions like schools, which is where the produce sales have been hurt the most. There's been no shortage of demand for produce and most other foods at the grocery store as consumer has been forced to shift their spending on food from restaurants to almost exclusively from grocery stores and related businesses. People are not eating less, but they are buying food now mostly from grocery stores. There's a tremendous spike in the price of produce at the grocery stores in the first several weeks of all the closings, our farmers were able to take a little bit advantage of that. While pricing has come down to more normal level, I don't…

All right, thank you, David, and good morning everyone. I begin by going over the balance sheet. During the first quarter, our total assets increased by about $24 million primarily due to the proceeds from the equity issuances, David mentioned earlier. From a financing perspective, in addition to these equity issuances, we also secured one new loan for about $8 million, which will carry a fixed interest rate of 2.66% for the next four years. From a leverage standpoint and on a fair value basis, our loan-to-value ratio and our total farmland holdings was about 51% at March 31. We're comfortable at this level given the relative low-risk of high-quality of farmland as an overall asset class. In addition, over 99% of our volumes are currently at fixed rates and our weighted average basis these rates are fixed at 3.57% for another six years out. So we believe we are currently well-protected on the debt side against any future interest rate volatility. And with the weighted average maturity of these borrowings being 10 plus years out, we also feel that we're protected against potential liquidity issues should a recession hit. But right now based on discussions we've had with our lenders, we do not believe there will be a credit freeze in near-term future. Right now, credit generally remains readily available to us and at favorable terms. Regarding upcoming debt maturities, we have about $26 million coming due over the next 12 months. However, about $15 million of that represents the maturities of three bullet loans coming due towards the end of the year. The three properties collateralizing these loans have increased in value by about $2.7 million since their respective acquisitions, so we do not foresee any problems refinancing these loans either with the same lender or potentially new…

All right, thank you, Lewis. Our list of potential farms to buy remains very healthy and we expected to be very active over the next couple of quarters. We should be able to continue to report positive news to you and I think we'll be over $1 billion in assets this time next year. And just a few final points before we get some questions. We do believe that investing in farmland and growing crops that contribute to healthy lifestyle such as fruits and vegetables and nuts is following the trend that we're seeing in the markets today. Currently about 85% of our total revenue comes from farms that are growing this type of food that you can find in either the produce, a nut section of your local grocery store. We consider these foods to be among the healthiest type foods that – and we continue to see a growing trend toward organic among these foods. Over 45% of our fresh produce acreage is either organic or transitioning to organic and about 10% of our permanent crops, these are the trees that are out there growing the nuts that we have fall into this organic category. We believe organic sector will continue to be a strong growing area. In addition, crops classified as being GMO grown on less than 5% of our farmland and I think that will change over time to zero. Another major reason why our business strategy is to focus on farmland growing fresh produce due to the effects of inflation in this particular segment. According to the Bureau of Labor Statistics, the overall annual food CPI generally keeps pace with inflation. However, over the past 40 years, the fresh fruits and vegetable segment of the food category has outpaced the total food CPI by a…

Yes, Mr. Gladstone. Thank you for that. [Operator Instructions]

Any questions?

[Operator Instructions]

I guess we aren't going to have any questions this time. We just produce so much income and so much dividends, people just are happy and not needing to ask any questions. So thank you all for calling in. And Dexter, I think we'll close it up. Thank you. That's the end of this call.

You're welcome, Mr. Gladstone. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.