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Gladstone reports net losses for Q4 and 2017

Chairman and chief executive David Gladstone says rising inflation, which he believes is currently under-reported, is driving up farmland values.

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Farmland REIT Gladstone Land reported net losses for both the fourth quarter and 2017 on Wednesday, highlighting the potential for its permanent crops-dominated portfolio to benefit from an uptick in inflation.

Virginia-headquartered Gladstone reported a net loss of $216,000 for the fourth quarter of 2017, an improvement over the $247,000 net loss the company posted for the previous period. The annual loss of $34,000 in 2017, however, reflected significant decline from the $473,000 in net income generated in the previous year.

In an earnings call with analysts, chairman and chief executive David Gladstone highlighted $120 million in new farm acquisitions the firm completed last year and the $150 million in series B shares that the firm offered last month as positioning the company well for future growth.

Gladstone, who is the largest stockholder of his company’s NASDAQ-traded stock, said inflation was driving up land values and the company would endeavor to continue increasing its dividend faster than prices do. He argued that the company’s stock, which closed at $12.36 per share on Tuesday and has paid a total of $3.38 per share through 60 consecutive monthly distributions since 2013, can be viewed as a hedge against inflation.

“The government will tell you there’s little inflation, but anyone buying food can tell you a different story,” said Gladstone, before adding that it was especially the case for the fresh produce grown on most of Gladstone’s properties. “According to the Bureau of Labor statistics, the overall food CPI generally keeps pace with inflation. However, over the past 20 years, the fresh fruits and vegetable segment of the food category has outpaced the total food CPI by a multiple of 1.7 times. So, we’re in the right space.”

Gladstone’s current portfolio totals 63,000 acres across 74 properties in nine US states, valued at $536 million. Gladstone said 85 percent of total revenue comes from produce and nuts and that 45 percent of its permanent-crop acreage is either certified organic or currently undergoing the three-year transition to organic production.