American Farmland Company (NYSE MKT: AFCO) (the “Company”), a
specialized real estate investment trust focused on the ownership,
acquisition, development and management of a portfolio of
diversified, high-quality U.S. farmland, today announced financial
and operating results for the quarter and year ended December 31,
2015.
“The fourth quarter of 2015 was an exciting time for American
Farmland Company, as we completed our entry into the public equity
market and announced a significant accretive acquisition which we
closed in early 2016,” said Thomas S.T. Gimbel, Chief Executive
Officer. “The quarter capped a strong year of top-line growth, with
operating revenues for 2015 exceeding $10 million, reflecting 40%
year-over-year growth, driven both by acquisitions and our
same-property portfolio. In addition, the appraised value of our
farms grew to $216 million as of year-end, as orchard, vineyard and
specialty row crop farm values continued their upward trend even as
commodity row crop farm values softened in certain regions.”
Highlights and Recent Activity
Include
- Generated Adjusted Funds from
Operations (AFFO) of $0.02 per diluted share for the quarter and
$0.26 per diluted share for the year ended December 31, 2015;
- Reported operating revenues of $3.1
million for the quarter and $10.1 million for the year ended
December 31, 2015, increases of 34.0% and 39.8% as compared to the
respective prior year periods;
- Reported net operating income (NOI) of
$2.5 million for the quarter and $8.5 million for the year ended
December 31, 2015;
- Generated same-property operating
revenues of $8.2 million for the year ended December 31, 2015, a
13.5% increase over the prior year;
- Net Asset Value (NAV) was $10.05 per
diluted share as of December 31, 2015, based on independent
third-party appraisals performed as of year-end;
- Completed the company’s underwritten
initial public offering and listing on the NYSE MKT LLC, issuing
6,000,000 new shares of common stock and generating net proceeds of
$39.2 million after deducting underwriting discounts and offering
expenses;
- Increased the borrowing capacity
available under the company’s revolving credit facilities by $15
million to an aggregate of $90 million;
- Closed on the previously announced
acquisition of four mature permanent crop farms comprising 2,186
gross acres and 1,718 net plantable acres for a combined gross
purchase price of $63.5 million, excluding transaction costs, from
Sun Dial Farms, LLC and its affiliates;
- Announced a $0.0625 quarterly per share
dividend for the fourth quarter of 2015, which was paid on December
29, 2015 to shareholders of record on December 22, 2015; and
- Announced a $0.0625 quarterly per share
dividend for the first quarter of 2016 ($0.25 annualized), payable
on March 31, 2016 to shareholders of record on March 21, 2016
Financial Highlights
AFFO was $0.3 million, or $0.02 per diluted share, for the
fourth quarter of 2015, as compared to $1.0 million, or $0.10 per
diluted share, for the fourth quarter of 2014. For the year ended
December 31, 2015, AFFO was $3.3 million, or $0.26 per diluted
share, as compared to $3.1 million, or $0.30 per diluted share, for
the prior year.
Net loss was $(8.3) million, or $(0.54) per diluted share, for
the fourth quarter of 2015, as compared to net income of $0.1
million, or $0.01 per diluted share, for the fourth quarter of
2014. For the year ended December 31, 2015, net loss was $(7.9)
million, or $(0.65) per diluted share, as compared to net income of
$0.7 million, or $0.07 per diluted share, for the prior year. The
net loss for 2015 was impacted by the non-recurring Internalization
expense incurred in the fourth quarter of 2015, which is further
discussed below, and the dilutive effect of which was borne
entirely by the existing shareholders of the Company and the
holders of the limited partnership units in American Farmland
Company L.P. prior to the initial public offering.
Operating revenues for the fourth quarter of 2015 were $3.1
million, an increase of $0.8 million or 34.0% as compared to the
fourth quarter of 2014. Operating revenues for the year ended
December 31, 2015 were $10.1 million, an increase of $2.9 million
or 39.8% as compared to 2014. The increase in 2015 operating
revenues over the prior year was primarily due to new leases with
existing tenants at Golden Eagle Ranch and Blue Heron Farms that
provide for higher fixed base rents, rents (both fixed and
participating) from the properties acquired in the third quarter of
2015 (Kingfisher Ranch and the second tranche of Golden Eagle
Ranch) and the fourth quarter of 2014 (Falcon Farms and the second
and larger tranche of Kimberly Vineyard), offset somewhat by lower
participating rents from same-property farms, where decreases from
Blue Heron Farms and the initial tranche of Kimberly Vineyard
outweighed increased participating rent received from the initial
tranche of Golden Eagle Ranch. The recently acquired Kingfisher
Ranch (acquired in August 2015), in particular, generated strong
participating rent in the fourth quarter of 2015, due to the
receipt of crop insurance by the tenant for the 2015 crop during
the fourth quarter of 2015 and the Company’s formulaic
participation in these insurance proceeds, which was recorded as
participating rent in 2015 and will result in lower participating
rent in 2016, as discussed under “Operating Highlights” below.
Net operating income (NOI) for the fourth quarter of 2015 was
$2.5 million, an increase of $0.7 million as compared to the fourth
quarter of 2014. NOI for the year ended December 31, 2015 was $8.5
million, an increase of $2.6 million as compared to 2014. The
increase in 2015 NOI over the prior year was primarily due to the
revenue contribution from acquired farms and the higher operating
revenues from same-property farms (discussed below in Operating
Highlights).
During the fourth quarter of 2015, the Company recorded an
expense pertaining to the internalization of its management
function concurrent with the consummation of its initial public
offering amounting to $9.8 million, shown as “Internalization
expense” in the consolidated statements of operations. The total
expense was comprised of the $7.9 million value of the 986,438
units of limited partnership interest in American Farmland Company
L.P. issued to the owners of the Company’s previous external
manager, $1.0 million in net liabilities assumed (primarily
comprised of the legacy performance fees due to the Company’s
agricultural sub-adviser), and $0.9 million of transaction costs.
The “Internalization expense” recorded in the fourth quarter of
2015 is a non-recurring expense, and the Company has added this
expense back to Funds from Operations attributable to the Company
(FFO) in the calculation of Core Funds from Operations attributable
to the Company (Core FFO) and AFFO. The Internalization expense was
borne entirely by the existing shareholders of the Company and the
holders of the limited partnership units in American Farmland
Company L.P. prior to the initial public offering. Following the
consummation of the initial public offering, the Company will no
longer incur expenses which have previously been recorded as
“Management and performance fees-related party”, in the
consolidated statements of operations.
As of December 31, 2015, the appraised value of the Company’s 18
farms, as determined by independent third-party appraisers, was
approximately $216 million, up from $208 million as of the initial
public offering and based on appraisals as of June 30, 2015.
Adjusting for balance sheet assets and liabilities as of December
31, 2015 results in Company stockholders’ equity determined on the
basis of fair value of $169.8 million, or $10.05 net asset value
per share. Company stockholders’ equity per share as of December
31, 2015 was $7.92.
See “Non-GAAP Financial Measures” for definitions of FFO, Core
FFO, AFFO, NOI and NAV and the financial tables accompanying this
press release for reconciliations of net income to FFO, Core FFO,
AFFO, and NOI, and stockholders’ equity to NAV.
Operating Highlights
Total operating revenues for the Company’s same-property farms
was $8.2 million for the year ended December 31, 2015, an increase
of $1.0 million, or 13.5%, from $7.2 million for the year ended
December 31, 2014. The same-property portfolio includes only farms
owned by the Company for the entirety of both periods presented,
which included all farms except for the second tranche of Golden
Eagle Ranch, Kingfisher Ranch, Falcon Farms, and the second tranche
of Kimberly Vineyard. The increase in same-property operating
revenues was primarily due to new leases with existing tenants at
the initial tranche of Golden Eagle Ranch and Blue Heron Farms that
provide for higher fixed base rents, offset somewhat by decreased
participating rents year-over-year. Fixed rent for the
same-property farms increased $1.1 million year-over-year to $4.4
million, driven by increases at the initial tranche of Golden Eagle
Ranch and Blue Heron Farms due to the rent increases discussed
above, while participating rent for the same-property farms
decreased $0.2 million year-over-year, due to decreases at Blue
Heron Farms (timing of crop sales in 2015 versus 2014) and the
initial tranche of Kimberly Vineyard (lower than expected 2015
production yield), which outweighed the increase in participating
rent from Golden Eagle Ranch (benefited from strong almond prices
relating to the 2014 crop in 2015).
Revenues from participating leases exhibit variability from year
to year around harvest yields and cycles as well as fluctuating
crop prices, and are therefore subject to seasonality, production
yields (which are subject to weather conditions and the alternate
bearing nature of certain crops, among other factors), the timing
of crop harvests and crop sales, crop prices and changes in crop
prices throughout the year, contracts for minimum price guarantees,
and any applicable crop insurance claims (settlement amounts and
timing of settlements). As an example, the Company’s Kingfisher
Ranch (a pistachio property acquired in the third quarter of 2015),
experienced a weak 2015 production yield, and the tenant pursued
insurance claims under its crop insurance policies. Pistachios are
generally harvested in the fall with crop sales (and thus the
Company’s participating rents) typically occurring and being
recognized in both the fourth quarter of the harvest year as well
as into the following year. At Kingfisher Ranch, due to the poor
2015 crop, these insurance claims were settled in full in the
fourth quarter of 2015 and resulted in the Company’s recognition of
higher than otherwise expected participating revenues in 2015 for
Kingfisher Ranch (i.e., in the event of a normal crop, a portion of
the 2015 crop yield would have been recognized as 2016
participating revenues, but due to the insurance settlement,
substantially all 2015 crop revenues were recognized in 2015). The
full insurance settlement recognition in 2015 will result in little
to no 2016 participating revenues at Kingfisher for the 2015 crop.
By way of another example, the Company’s Golden Eagle Ranch
generated strong participating revenues in 2015 due to the strength
of the 2014 crop production as well as high almond prices
throughout the majority of 2015 when the 2014 crop was sold by the
tenant. However, the 2015 crop at Golden Eagle Ranch was
significantly lower than the 2014 crop due to poor growing
conditions. Lower 2015 farm production combined with a more recent
decline in almond prices is expected to result in substantially
lower participating rents from Golden Eagle Ranch in 2016 than were
recorded in 2015. Due to the year over year decline in
participating rents expected from Golden Eagle Ranch during 2016,
the Company expects 2016 operating revenues generated from
same-property farms to be lower in 2016 than in 2015. Variability
in crop revenues from year to year, both upwards and downwards, is
common in the farming industry, and we therefore expect variability
in our participating rents to continue as long as we continue to
use participating lease types.
All of the Company’s non-development farms were under lease as
of December 31, 2015.
Development Activities
The Company had six farms in development as of December 31,
2015, having an aggregate appraised value of $53.4 million, or
comprising 25% of the total appraised value of farmland held at
December 31, 2015. Operating loss from development farms was $(0.1)
million for 2015. Capital expenditures (net of revenue offsets) at
development farms during 2015 totaled $7.5 million of the total
$8.2 million of 2015 capital expenditures. The majority of 2015
capital spend was deployed at Hawk Creek, Blue Cypress Farm and
Grassy Island.
The development of Blue Cypress Farm, located in Brevard County,
Florida, was substantially completed after year-end, and the
property has been subsequently leased to a tenant during the first
quarter of 2016. In the normal course of its strategic review of
properties, the Company regularly evaluates the possibilities to
recycle capital currently deployed in certain of its non-yielding
development farms into new income-yielding acquisitions in the
coming year.
Investing Activities
The Company completed two acquisitions of permanent crop
properties during 2015, each during the third quarter, amounting to
an aggregate purchase price of $25.1 million. The second tranche of
Golden Eagle Ranch, planted with almonds, was acquired on August
18, 2015 for $5.2 million, and Kingfisher Ranch, planted with
pistachios, was acquired on August 21, 2015 for $19.9 million.
Subsequent to year end, on January 27, 2016, wholly-owned
subsidiaries of the Company completed the previously announced
acquisition of a portfolio of mature permanent crop properties
aggregating to approximately 2,186 gross acres and approximately
1,718 net plantable acres for a combined gross purchase price of
$63.5 million, excluding transaction costs, from Sun Dial Farms,
LLC and its affiliates (the “Sellers”). The acquisition
substantially increased the Company’s farmland assets by
approximately 30%. The seven acquired properties are located across
multiple counties in California, each with its own on-site well(s)
and / or surface water, and will be operated as four distinct
farms, with properties grouped into a particular farm based on crop
type and location. Crops planted include almonds, lemons, mandarins
and several other fresh citrus varieties as well as a small
planting of prunes.
The properties were previously owner-occupied and, as a result,
do not have a prior leasing history. Upon closing, the Company
entered into four separate participating leases with affiliates of
the Sellers, which are expected to provide a blended first year
fixed base rent yield of approximately 5% of the purchase price,
with the potential for additional income from formulaic
participation in the crop revenue above a fixed threshold and with
the base rent and fixed threshold each having annual escalators.
Affiliates of the Sellers are also the tenants on the Company’s
Golden Eagle Ranch property. The acquisition was funded from cash
on hand and additional borrowings under the Company’s existing
revolving credit facilities.
Financing Activities
In October 2015, the Company completed its underwritten initial
public offering in which it sold 6,000,000 shares of common stock
at $8.00 per share, raising net proceeds of $39.2 million after
deducting underwriting discounts and offering expenses. The
Company’s shares commenced trading on the NYSE MKT LLC platform
under the ticker symbol “AFCO” on October 20, 2015.
In December 2015, the Company entered into a new secured
revolving loan agreement and amended its existing secured revolving
credit facilities to provide for an additional $15 million of
borrowing capacity, bringing the aggregate borrowing capacity under
its four secured revolving credit facilities to $90 million. As of
December 31, 2015, the Company had outstanding $27.2 million under
these revolving credit facilities.
Subsequent to December 31, 2015, the Company drew on its
existing revolving credit facilities to partially fund the $63.5
million purchase price of four permanent crop farms from the
Sellers and, as of the date of this release, approximately $81
million was outstanding under such revolving credit facilities.
Each of the Company’s four secured revolving credit facilities,
which have maturities between January 2019 and January 2021,
provides for a drawn borrowing cost of 3-month Libor plus 130 basis
points (approximately 1.91% as of December 31, 2015) and may be
prepaid at any time without penalty to the Company. The Company
believes it is in compliance with the covenants of its credit
facilities.
Quarterly Dividends
On March 2, 2016, the Board of Directors of the Company approved
and declared a quarterly cash dividend of $0.0625 per share on the
common stock of the Company and a quarterly cash distribution of
$0.0625 per unit on the units of limited partnership interest of
American Farmland, L.P. for the first quarter of 2016. The dividend
will be paid on March 31, 2016 to stockholders of record of the
Company at the close of business on March 21, 2016. The
distribution will be paid on March 31, 2016 to unitholders of
record of American Farmland, L.P. at the close of business on March
21, 2016.
FOR ADDITIONAL INFORMATION
For additional information about the Company, please see the
“Investor Relations” section of American Farmland Company’s website
at www.americanfarmlandcompany.com.
ABOUT AMERICAN FARMLAND COMPANY
American Farmland Company is an internally managed real estate
investment trust and a Maryland corporation focused on owning and
acquiring a diversified portfolio of high-quality farmland,
consisting of mature permanent, specialty/vegetable row and
commodity row crop farms, as well as farmland development projects,
located in select major agricultural regions throughout the United
States. As of the date of this release, the Company’s portfolio
consists of 22 farms located on both coasts as well as in the Corn
Belt and the Delta regions and consists of approximately 18,322
gross acres of farmland, with more than 21 major crop types
(approximately 40 when including crop varieties).
NON-GAAP FINANCIAL MEASURES
The Company believes FFO, Core FFO, AFFO, NOI and NAV are
non-GAAP financial measures that investors may find useful as key
supplemental measures of its performance. These non-GAAP financial
measures should be considered along with, but not as alternatives
to, net income or loss, and stockholders’ equity. Further, these
non-GAAP financial measures as calculated by the Company may not be
comparable to how other companies define and calculate such
terms.
FFO attributable to the Company
The Company believes FFO is a useful, supplemental measure of
its operating performance that is a recognized metric used
extensively by the real estate industry and, in particular, REITs.
The Company calculates FFO attributable to the Company in
accordance with the standards established by the National
Association of Real Estate Investment Trusts (NAREIT). NAREIT
defines Funds From Operations (FFO) as net income (loss) computed
in accordance with generally accepted accounting principles (GAAP),
excluding gains (or losses) from sales of depreciated real estate
assets, real estate related depreciation and amortization
(excluding amortization of deferred financing costs) and after
adjustments for unconsolidated partnerships and joint ventures in
which the reporting entity holds an interest. The Company believes
that net income attributable to the Company is the most directly
comparable GAAP measure to FFO attributable to the Company. FFO
attributable to the Company, however, does not represent an
alternative to “Net Income (Loss)” as an indicator of the Company’s
performance or “Cash Flows from Operating Activities” as determined
by GAAP as a measure of the Company’s capacity to fund cash needs,
including the payment of dividends.
Management presents FFO attributable to the Company as a
supplemental performance measure because it believes that FFO
attributable to the Company is beneficial to investors as a
starting point in measuring the company’s operational performance.
Specifically, in excluding real estate related depreciation and
amortization and gains and losses from sales of depreciable
operating farms, which do not relate to or are not indicative of
operating performance, FFO attributable to the Company provides a
performance measure that, when compared year over year, captures
trends in occupancy rates, rental rates and operating costs.
Management also believes that, as a widely recognized measure of
the performance of REITs, FFO attributable to the Company will be
used by investors as a basis to compare the Company’s operating
performance with that of other REITs. However, other equity REITs
may not calculate FFO attributable to the Company in accordance
with the NAREIT definition as does the Company, and, accordingly,
the Company’s FFO attributable to the Company may not be comparable
to such other REITs’ FFO attributable to the Company.
Core FFO attributable to the Company and
Adjusted FFO (AFFO)
The Company calculates Core FFO attributable to the Company by
adding back to FFO attributable to the Company (i) performance fees
payable to related parties (which ceased following the
internalization transaction), (ii) acquisition-related expenses,
and (iii) other income and expense items considered to be
non-recurring in nature (including the expense related to the
Company’s internalization transaction incurred concurrent with its
initial public offering). The Company calculates AFFO attributable
to the Company by adding back to Core FFO attributable to the
Company (i) amortization of deferred financing costs, (ii)
stock-based compensation expense (which has not been incurred to
date, but which the Company anticipates will be incurred in future
periods), (iii) non-real estate depreciation and amortization
expense, if any (iv) straight line rent adjustments, and (v) above
and below market lease adjustments, if any.
Management believes Core FFO attributable to the Company and
AFFO attributable to the Company are important supplemental
measures of operating performance because they are measures of cash
flow available for stockholders and measures that can be analyzed
in conjunction with the ability to pay dividends. The Company is
required in certain instances to expense costs for GAAP purposes
related to acquiring the farms, such as the acquisition fee paid to
its agricultural sub-adviser, and legal, professional and other
fees (including transfer taxes in some cases) associated with
closing the purchase of each property which do not correlate with
the ongoing operations of its existing properties. In addition, the
amortization of costs to obtain financing is a non-cash expense
item, as is stock-based compensation expense. The Company believes
that net income attributable to the Company is the most directly
comparable GAAP measure to Core FFO attributable to the Company and
AFFO attributable to the Company. Core FFO attributable to the
Company and AFFO attributable to the Company, however, do not
represent alternatives to “Net Income (Loss)” as an indicator of
the Company’s performance or “Cash Flows from Operating Activities”
as determined by GAAP as a measure of the Company’s capacity to
fund cash needs, including the payment of dividends. Other equity
REITs may not calculate Core FFO attributable to the Company and
AFFO attributable to the Company as does the Company, and,
accordingly, the Company’s Core FFO attributable to the Company and
AFFO attributable to the Company may not be comparable to such
other REITs’ calculations of these measures.
Net Operating Income (NOI)
The Company defines NOI as operating revenues (rental income
comprising both fixed and participating rent, tenant recovery
income and other property income, excluding straight line rental
income, amortization of lease inducements, amortization of acquired
above and below market lease intangibles and lease termination fee
income), less property operating expenses (real estate tax expense
and property operating expense). Management believes NOI provides
useful information to investors regarding the Company’s results of
operations because it reflects only those income and expense items
that are incurred at the property level and when compared across
periods reflects the impact on operations from trends in occupancy,
rental rates including participating rents, property operating
costs and acquisition and disposition activity, on an unleveraged
basis and excluding general and administrative overhead costs.
Management believes that net income attributable to the Company is
the most directly comparable GAAP measure to NOI. However, NOI
should only be used as a supplemental measure of the Company’s
financial performance. Other REITs may use different methodologies
for calculating NOI and, accordingly, the Company’s NOI may not be
comparable to other REITs.
Net Asset Value (NAV) per share
The Company estimates the fair value of its farms based on
appraised value, expressed in terms of net asset value (NAV). NAV
is calculated as stockholders’ equity of the Company, as adjusted
for the increase or decrease in fair value of the portfolio
attributable to the Company, and then divided by the Company’s
total common shares outstanding. For purposes of determining the
adjustment between the investment in real estate on a GAAP basis
and on a fair value basis, all of the costs associated with the
acquisition of all properties were added to the cost thereof
(irrespective of whether the acquisition was treated as a business
combination or not), and no effect was given to straight-lining
rental income. In addition, all capital expenditures and
development costs post-acquisition are capitalized and thereafter
added to the cost of all of the properties, and included in net
book value, for purposes of the fair value analysis. Management
presents NAV as a supplemental non-GAAP measure because it believes
that NAV is beneficial to investors in measuring whether the
company’s investments in real estate have appreciated in value, in
aggregate, since their respective dates of acquisition. However,
due to possible differences in the calculation or application of
the definition of NAV, including the reliance on independent,
third-party appraisers in determining fair value, a comparison of
the Company's NAV to similar measures utilized by other REITs may
not necessarily be meaningful.
In determining the fair value of the investments in real estate,
the Company has relied on independent third party appraisers who
(except as noted below) performed their formal appraisals as of
December 31 in each calendar year for each property. The Company’s
independent auditors have not audited or reviewed these appraisals.
Properties that were purchased in the fourth quarter of any
calendar year were not appraised until December 31 of the calendar
year end following the year of acquisition. Until first appraised,
such properties were valued at cost. While management believes that
values presented fairly reflect current market conditions, such
values are subjective and are based on assumptions, judgments and
estimates that are dependent upon market conditions that are
subject to change without notice and, therefore, may prove to be
inaccurate. Such inaccuracies may have a material impact on the
Company’s overall portfolio valuation. The value of each property
will ultimately be determined by the timing of, and market
conditions that exist upon, the disposition of each property.
FORWARD-LOOKING STATEMENTS
Certain matters discussed in this press release constitute
forward-looking statements within the meaning of the federal
securities laws. These forward-looking statements include, without
limitation, statements concerning projections, predictions,
expectations, estimates, or forecasts as to the Company’s business,
financial or operational results, and future economic performance,
as well as statements of management’s goals and objectives and
other similar expressions concerning matters that are not
historical facts. The words “may,” “believe,” “estimate,” “expect,”
“intend,” “plan,” “predict,” “project,” “forecast,” “potential,”
“will,” “would,” “could,” “should,” “continue,” and similar
expressions or their negatives, as well as statements in future
tense, are intended to identify forward-looking statements,
although not all forward-looking statements contain these
identifying words. The Company may not actually achieve the plans,
intentions or expectations disclosed in these forward-looking
statements, and you should not place undue reliance on these
forward-looking statements. Forward-looking statements are based on
management’s beliefs, assumptions and expectations of future
performance, taking into account all information available at the
time those statements are made or management’s good faith belief as
of that time with respect to future events and, accordingly, actual
results or events could differ materially from the plans,
intentions and expectations disclosed in the forward-looking
statements. Furthermore, these forward-looking statements should be
considered as subject to the many risks and uncertainties that
exist in the Company’s operations and business environment. Such
risks and uncertainties could cause actual results to differ
materially from those projected. These uncertainties include, but
are not limited to, economic, business and financial conditions,
the Company’s business strategy and leverage, the Company’s ability
to generate sufficient cash flow to service outstanding
indebtedness, the Company’s ability to obtain outside financing,
availability, terms and deployment of capital, general volatility
of the capital markets and the market price of the Company’s common
stock, industry, interest rates or the general economy, degree and
nature of competition, risks generally associated with real estate
acquisitions, dispositions and development, the Company’s ability
to identify farms to acquire and to complete acquisitions, the
Company’s ability to effectively manage growth, the ability of the
Company’s tenants to successfully manage their business and pay
contractual rents when due, the variability in revenues relating to
participating rent from crop yields, crop prices, the timing of
payments or other factors, regulatory and tax law changes and other
risk factors, including those detailed in the sections of the
Company’s most recent 10-Q and other filings with the SEC titled
“Risk Factors”. Except as required by law, the Company undertakes
no obligation to update publicly any forward-looking statements for
any reason after this date to conform these statements to actual
results or changes in the Company’s expectations.
AMERICAN FARMLAND COMPANY AND
SUBSIDIARIES
Consolidated Balance Sheets
December 31,
December 31,
2015 2014 ASSETS: Investments in real estate—net
$171,342,731 $140,104,858 Cash and cash equivalents 14,518,788
7,466,642 Rent receivable 1,766,254 1,549,175 Deferred financing
costs, net 558,992 146,467 Deferred offering costs — 1,363,388
Other assets 2,099,336 466,282 TOTAL ASSETS
$190,286,101 $151,096,812 LIABITILIES AND
EQUITY: LIABILITIES: Borrowings under credit facilities $27,200,000
$20,400,000 Accrued expenses and other liabilities 2,377,305
2,856,580 Subscription received in advance — 5,250,000 Performance
fee payable to AFA — 1,231,398 Legacy performance fee payable to
Agricultural Sub-Adviser 1,106,307 — Management fee payable to AFA
— 331,143 Unearned rent 834,858 1,587,976 Total
Liabilities 31,518,470 31,657,097 Commitments and
contingencies EQUITY: Common stock, $0.01 par value—300,000,000
shares authorized; 16,890,847 shares issued and outstanding at
December 31, 2015 and 10,436,902 shares issued and outstanding at
December 31, 2014 168,908 104,369 Preferred stock, $0.01 par
value—0 shares issued and outstanding at December 31, 2015 and 29
shares issued and outstanding at December 31, 2014 — — Additional
paid-in-capital 151,266,420 105,445,855 Accumulated deficit
(17,644,793 ) (6,672,472 ) Company stockholders’ equity 133,790,535
98,877,752 Non-controlling interests in operating partnership
24,977,096 20,561,963 Total equity 158,767,631
119,439,715 TOTAL LIABILITIES AND EQUITY $190,286,101
$151,096,812
Supplemental Operating and Financial
Data
December 31,2015
December 31,2014
Farms owned 18 17 Gross acres owned 16,136 15,378 Tillable acres
owned 13,251 12,610 Appraised value of farmland (based on
independent third-party appraisals) $215,835,000 $168,781,037
AMERICAN FARMLAND COMPANY AND
SUBSIDIARIES
Consolidated Statements of
Operations
Three Months Ended
December 31,
Year Ended
December 31,
2015 2014 2015 2014
OPERATING REVENUES Fixed rent $1,463,697 $958,237 $5,273,436
$3,289,130 Participating rent 1,432,670 1,248,386 4,307,950
3,608,309 Recovery of real estate taxes 134,679 82,112 484,983
310,643 Other income 19,932 (11,244 ) 82,667 52,981
Total operating revenues 3,050,978 2,277,491
10,149,036 7,261,063 OPERATING EXPENSES Depreciation
616,574 400,862 2,027,091 1,530,911 Management and performance
fees—related party
144,900 955,350 2,884,756 2,528,255 Property operating expenses
477,022 422,481 1,594,177 1,351,655 Acquisition-related expenses —
— — 44,712 Professional fees 647,530 122,326 1,020,882 406,008
Internalization expense 9,794,745 — 9,794,745 —- Sub-advisory fees
413,930 — 413,930 —- General and administrative expenses 725,064
123,944 912,489 273,321 Total operating
expenses 12,819,765 2,024,963 18,648,070
6,134,862 OPERATING (LOSS) INCOME (9,768,787 ) 252,528
(8,499,034 ) 1,126,201 Other (income) expense:
Interest income (204 ) (184 ) (1,404 ) (1,980 ) Interest expense
and financing costs 191,719 50,804 594,822
119,094 Total other expense 191,515 50,620
593,418 117,114 (LOSS) INCOME BEFORE (LOSS) GAIN ON
SALE OF ASSETS (9,960,302 ) 201,908 (9,092,452 ) 1,009,087 (Loss)
gain on sale of assets (29,414 ) — (29,414 ) 47,701
(LOSS) INCOME BEFORE INCOME TAXES (9,989,716 ) 201,908 (9,121,866 )
1,056,788 Income tax provision 86,016 — 165,848
— NET (LOSS) INCOME (10,075,732 ) 201,908 (9,287,714
) 1,056,788 Less net (loss) income attributable to
non-controlling interests
(1,730,046 ) 93,287 (1,413,105 ) 346,071 NET (LOSS)
INCOME ATTRIBUTABLE TO THE COMPANY $(8,345,686 ) $108,621
$(7,874,609 ) $710,717 (LOSS) EARNINGS PER COMMON SHARE
Basic and diluted(1) $(0.54 ) $0.01 $(0.65 ) $0.07 WEIGHTED AVERAGE
SHARES OF COMMON STOCK OUTSTANDING Basic and diluted(1) 15,456,064
10,419,996 12,041,532 10,404,087 Cash dividends declared per
common share(2) $0.0625 $0.1250 $0.2500 $0.2500 (1)
For the three months and year ended December 31, 2015, the
inclusion of the operating partnership units is antidilutive to
loss per common share and has therefore been excluded in the
presentation of loss per common share. (2) In 2014, the Company
paid dividends semi-annually.
Reconciliation of Net Income Attributable to the Company to
FFO, Core FFO and AFFO Attributable to the Company
The following table sets forth a reconciliation of FFO
attributable to the Company, Core FFO attributable to the Company
and AFFO attributable to the Company to net income attributable to
the Company, the most directly comparable GAAP equivalent, for the
periods presented.
Three Months Ended
December 31,
Year Ended
December 31,
2015 2014 2015 2014 Net
income (loss) attributable to the Company $(8,345,686 ) $108,621
$(7,874,609 ) $710,717 Loss (gain) on sale of depreciable real
estate 29,414 - 29,414 (47,701 ) Depreciation 616,574 400,862
2,027,091 1,530,911 Non-controlling interests' share of above
adjustments (106,366 ) (70,825 ) (349,240 ) (261,213 )
FFO
attributable to the Company (7,806,064 )
438,658 (6,167,344 ) 1,932,714
Weighted average shares(1) 15,456,064 10,419,996
12,041,532 10,404,087
FFO attributable to the Company per
share $(0.51 ) $0.04 $(0.51 ) $0.19
FFO attributable
to the Company (7,806,064 ) 438,658
(6,167,344 ) 1,932,714 Performance
fees—related party(2) 27,184 624,207 1,490,980 1,231,398
Acquisition-related expenses — — — 44,712 Internalization expense
9,794,745 — 9,794,745 — Non-controlling interests' share of above
adjustments(3) (1,710,591 ) (79,628 ) (1,896,163 ) (169,859 )
Core FFO attributable to the Company 305,274
983,237 3,222,218 $3,038,965 Weighted
average shares(4) 17,943,770 10,419,996 12,668,570
10,404,087
Core FFO attributable to the Company per share
$0.02 $0.09 $0.25 $0.29
Core FFO attributable to the
Company 305,274 983,237 3,222,218
$3,038,965 Amortization of deferred financing costs(5)
28,863 9,130 80,272 33,493 Straight line rent adjustment (18,811 )
17,660 (26,498 ) 8,735 Non-controlling interests' share of above
adjustments (1,203 ) (4,733 ) (8,728 ) (7,450 )
AFFO
attributable to the Company $314,123 $1,005,294
$3,267,264 $3,073,743 Weighted average
shares(4) 17,943,770 10,419,996 12,668,570 10,404,087
AFFO attributable to the Company per share $0.02 $0.10 $0.26
$0.30 (1) For the three months and year ended
December 31, 2015, the inclusion of the operating partnership units
is antidilutive to FFO per common share and has therefore been
excluded in the presentation of FFO per common share. (2) The
Company’s prior external advisor previously received performance
allocations, which are referred to as performance fees. Upon the
consummation of the internalization transaction and concurrent with
the initial public offering, these fees were no longer payable. (3)
For the three months and year ended December 31, 2015, includes an
adjustment to account for the impact of non-controlling interests’
share of adjustments to FFO which have not been included in FFO due
to the antidilutive effect of the operating partnership units on
the calculation of FFO per share (see also footnote 1 above). (4)
For the three months and year ended December 31, 2015, includes the
dilutive and weighted average impact of the operating partnership
units subsequent to the internalization transaction and initial
public offering. (5) Amortization of deferred financing costs was
previously included as an add-back to Core FFO, but with the
introduction of AFFO as a reported non-GAAP measure, the Company
has reclassified this item as an adjustment from Core FFO to AFFO.
Reconciliation of Net Income Attributable to the Company to
NOI
The following table sets forth a reconciliation of NOI to Net
Income Attributable to the Company, the most directly comparable
GAAP equivalent, for the periods presented.
Three Months Ended
December 31,
Year Ended
December 31,
2015 2014 2015 2014
Net (Loss) Income attributable to the Company
$(8,345,686 ) $108,621 $(7,874,609
) $710,717 Net (loss) income attributable to
non-controlling interests (1,730,046 ) 93,287 (1,413,105 ) 346,071
Income tax provision 86,016 — 165,848 — Loss (gain) on sale of
assets 29,414 — 29,414 (47,701 ) Total other expense 191,515
50,620 593,418 117,114
Operating (Loss) Income
$(9,768,787 ) $252,528 $(8,499,034
) $1,126,201 Depreciation 616,574 400,862 2,027,091
1,530,911 Straight line rent adjustment (18,811 ) 17,660 (26,498 )
8,735 Management and performance fees – related party 144,900
955,350 2,884,756 2,528,255 Acquisition-related expenses — — —
44,712 Professional fees(1) 619,599 114,621 978,614 386,236
Internalization expense 9,794,745 — 9,794,745 — Sub-advisory fees
413,930 — 413,930 — General and administrative expenses 725,064
123,944 912,489 273,321
NOI
$2,527,214 $1,864,965 $8,486,093
$5,898,371 (1) Excludes professional fees incurred at
the property operating level.
Reconciliation of Company Stockholders’ Equity to Net Asset
Value (NAV) per Share
The following table provides a reconciliation of Net Asset Value
(NAV) per fully diluted share to Company stockholders’ equity for
the periods presented.
December 31, 2015 December
31, 2014 Company stockholders’ equity $133,790,535 $98,877,752
Revaluation adjustment attributable to the Company(1) 36,000,227
21,827,892 Company stockholders’ equity determined on the basis of
fair value(2) $169,790,762 $120,705,644 Number of fully diluted
common shares outstanding 16,890,847 10,436,902
NAV per
share(3) $10.05 $11.57 (1) Represents the
difference between the appraised value of each property and its net
book value, after accumulated depreciation and after adding back
any acquisition-related expenses that were expensed. The
revaluation adjustment attributable to the Company excludes the
portion attributable to non-controlling interests. (2) Increases in
fair value are primarily driven by changes in independent
third-party appraisals, additional development costs and
acquisition-related expenses. (3) Net of cumulative dividends paid.
The estimated NAV per share following the company’s October 2015
initial public offering and giving effect to the $2.52 per share
dilutive effect of the initial public offering and internalization
transaction was $9.64 per share.
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version on businesswire.com: http://www.businesswire.com/news/home/20160307006504/en/
American Farmland CompanyLindsey Sichel or Andreas Spitzer,
212-484-3000www.americanfarmlandcompany.com
Grafico Azioni AMERICAN FARMLAND CO (AMEX:AFCO)
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