Farmland Partners targets AFFO of $14.5M–$16.6M and special dividend amid portfolio simplification

Earnings Call Insights: Farmland Partners Inc. (FPI) Q3 2025

MANAGEMENT VIEW

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CEO Luca Fabbri emphasized a strong quarter for the company, underlining the sale of brokerage and third-party farm management subsidiary Murray Wise Associates as "a very good outcome for our shareholders" and a move that significantly simplifies operations. He also highlighted the exchange of $31 million in Series A preferred units for Illinois properties, noting, "the properties were sold at a much appreciated value compared to the value of 10 years ago, appreciated by about 56%." Fabbri announced a planned special dividend for 2025 in the range of $0.18 to $0.22 per share, expected in January 2026, stating this continues their commitment to value delivery.

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Executive Chairman Paul Pittman pointed to the impact of a new China trade deal involving agricultural commodities, saying, "This will be a material bump in the exports of soybeans from the U.S. to China over the next few months," but cautioned its long-term impact is limited. Pittman added, "This year's AFFO...is based on some very positive operating events...and also the expansion of our loan program with some sort of opportunistic lending," but warned these are "onetime events."

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CFO Susan Landi reported, "For the 3 months ended September 30, 2025, net income was $0.5 million or $0 per share available to common shareholders...AFFO was $2.9 million or $0.07 per weighted average share, which was higher than the same period for 2024." Landi attributed this to lower interest expense, reduced property operating costs, and higher interest income from an increased loan balance. She also noted the company repaid $23 million on its lines of credit in July, leaving $159 million in undrawn capacity at Q3’s end.

OUTLOOK

* Landi stated, "The forecasted range of AFFO is $14.5 million to $16.6 million or $0.32 to $0.36 per share, which is an increase from the prior quarter on both the high and low end of the range." She cited higher management fees, interest income, and increased variable payments, crop sales, and crop insurance as drivers. Decreases in other revenue items were attributed to the sale of Murray Wise Associates, while higher impairment expense was mostly offset by lower operating and depreciation costs from property dispositions.

FINANCIAL RESULTS

* For the nine months ended September 30, 2025, Landi reported net income of $10.4 million or $0.18 per share and AFFO of $6.5 million or $0.14 per share, both higher than the prior year. Gain on asset dispositions reached $24.5 million from the sale of 35 properties for $85.5 million. Interest expense decreased by $3.2 million for the quarter and $8.4 million for the year-to-date period. General and administrative expenses fell by $0.4 million for the quarter and $1.7 million for the year-to-date period, mainly due to prior year one-time charges.

Q&A

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Robert Stevenson, Janney Montgomery Scott: Asked about the timing of the '23 farm sale and preferred unit retirement. Christine Garrison responded, "That transaction will close December 10." Pittman added that the company will not have to pay preferred dividends from August 1.

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Stevenson: Queried further expected sales. Pittman replied, "We've got a few other small ones in the hopper...not likely to be on the scale of that 23 Farm deal."

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Stevenson: Asked about the MetLife Term Loan maturing in March. Fabbri responded, "We are planning to renew it probably with MetLife themselves or with one of our other lenders."

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Stevenson: Inquired about the impact of the Murray Wise sale on revenue and expenses. Landi said, "The revenues are somewhat lumpy...I don't know that it's going to have a significant impact on our bottom line overall with that removal."

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Stevenson: Asked about increased legal and accounting expenses. Pittman said, "We continue to have some legal costs related to the short and distort but they're frankly modest...We've also got an ongoing legal dispute in Louisiana."

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Craig Kucera, Lucid Capital Markets: Asked about the Series A transaction, potential conversion, and impact. Pittman noted, "99% probability that we just pay that off and it does not get converted...a great transaction for us."

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Kucera: Asked about crop sales and walnut property impact. Landi answered, "We recognized about $0.2 million on the sale of the Blue Heron, our property in California, the walnut property."

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Kucera: Asked about the loan pipeline. Pittman explained, "We're almost always willing to do that because we are a high-cost lender...we extended somebody out, and that led to the move of the projections."

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John Massocca, B. Riley Securities: Asked about loan receivable maturities. Pittman stated, "We are gradually shrinking the portfolio...we've focused on expanding this loan program a little bit because it's high current yield."

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Massocca: Asked about soybean exposure. Pittman responded, "Approximately 50%" of row crop acreage rotates between corn and soybeans, but most leases are fixed cash rents, so exposure is indirect.

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Massocca: Inquired about share buybacks. Fabbri said, "Our buyback activity going forward will be driven as usual by potential additional dispositions and therefore, proceeds from those dispositions."

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Tousley Hyde, Raymond James: Asked about average rate increases and portfolio mix. Pittman said, "It will stay consistent...as our portfolio gets more and more weighted to the Midwest, it probably sticks closer to those kinds of averages."

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Hyde: Asked about renewal progress. Pittman noted, "It looks to us like in the row crop region...it will be more or less flat with last year...when we're in a cycle where you're negotiating...we just...extend out 1 year."

SENTIMENT ANALYSIS

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Analysts pressed on recurring revenue impacts, portfolio sales, legal costs, and special dividend implications, reflecting a neutral to slightly negative tone when questioning future AFFO consistency and legal risks.

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Management’s prepared remarks were confident regarding operational execution, but repeatedly cautioned about one-time events and next year’s AFFO baseline, signaling a slightly cautious tone. During Q&A, management remained composed, sometimes deferring on specifics, and often reiterating prudent capital management.

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Compared to the previous quarter, analyst skepticism remained steady, while management’s tone shifted from addressing impairments and asset sales to a more balanced outlook, emphasizing both recent strength and caution about the sustainability of performance drivers.

QUARTER-OVER-QUARTER COMPARISON

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Guidance for AFFO increased from $12.8 million–$15.5 million in Q2 to $14.5 million–$16.6 million in Q3. Management continued to highlight strong asset appreciation and operational execution, but with added emphasis on the one-time nature of certain revenue items.

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Strategic focus shifted from addressing impairment write-downs and portfolio exits in Q2 to simplification (Murray Wise sale) and shareholder value realization (special dividend) in Q3.

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Analysts' questions evolved from asset sale capacity and legal costs in Q2 to more granular inquiries about recurring revenue, the impact of the Murray Wise sale, and loan portfolio strategy in Q3.

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Management’s confidence in operational execution remained, but with heightened transparency about the non-recurring nature of some positive results.

RISKS AND CONCERNS

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Management noted risks related to the one-time nature of several positive events impacting AFFO, ongoing legal disputes (including the Louisiana farm), and the indirect exposure to commodity price volatility.

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Analysts raised concerns about the sustainability of AFFO, timing and impact of asset sales, legal expenses, and the effects of portfolio simplification on recurring revenue.

FINAL TAKEAWAY

Management underscored a strong third quarter driven by asset disposition gains, cost reductions, and opportunistic lending, while also highlighting the sale of Murray Wise Associates as integral to long-term simplification. The company raised its AFFO outlook to $14.5 million–$16.6 million and signaled a special dividend, but emphasized that recent performance benefited from one-time events and that a more modest baseline for AFFO should be expected going into next year. Ongoing portfolio optimization, prudent capital deployment, and careful risk management remain central to Farmland Partners’ strategy as it continues to navigate industry headwinds and deliver shareholder value.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/fpi/earnings/transcripts]

MORE ON FARMLAND PARTNERS

* Farmland Partners Inc. (FPI) Q3 2025 Earnings Call Transcript [https://seekingalpha.com/article/4836035-farmland-partners-inc-fpi-q3-2025-earnings-call-transcript]
* Seeking Alpha’s Quant Rating on Farmland Partners [https://seekingalpha.com/symbol/FPI/ratings/quant-ratings]
* Historical earnings data for Farmland Partners [https://seekingalpha.com/symbol/FPI/earnings]
* Dividend scorecard for Farmland Partners [https://seekingalpha.com/symbol/FPI/dividends/scorecard]
* Financial information for Farmland Partners [https://seekingalpha.com/symbol/FPI/income-statement]