American Farmland Company (NYSE MKT LLC: 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 results
for the quarter ended June 30, 2016.
“The review of strategic alternatives aimed at enhancing
shareholder value which we announced in April of this year is
progressing, and we will report back to shareholders once our Board
of Directors has completed the review or has otherwise approved a
specific action,” said Thomas S.T. Gimbel, Chief Executive
Officer.
Highlights and Recent Activity
Include
- Reported net loss attributable to the
Company of $(0.08) per diluted share for the quarter ended June 30,
2016 as compared to net income of $0.02 per diluted share for the
quarter ended June 30, 2015, and reported Core Funds from
Operations (Core FFO) attributable to the Company of $(0.01) per
diluted share for the quarter ended June 30, 2016 as compared to
$0.13 per diluted share for the quarter ended June 30, 2015;
- Reported total operating revenues of
$3.1 million for the quarter ended June 30, 2016 as compared to
$2.8 million for the quarter ended June 30, 2015;
- Generated same-property operating
revenues of $2.0 million for the quarter ended June 30, 2016 as
compared to $2.8 million for the quarter ended June 30, 2015, the
decrease being due to lower participating rent from the Golden
Eagle Ranch which as previously disclosed stems from lower
weather-related 2015 production yield and lower almond prices;
- Reported net loss attributable to the
Company of $1.3 million for the quarter ended June 30, 2016 as
compared to net income attributable to the Company of $0.2 million
for the quarter ended June 30, 2015, and reported net operating
income (NOI) of $2.5 million for the quarter ended June 30, 2016 as
compared to $2.4 million for the quarter ended June 30, 2015;
- Stated that approximately 75% of 2016
participating rent is expected to be earned during the fourth
quarter of 2016;
- Announced that on July 27, 2016, the
Company sold its Hawk Creek Ranch pistachio development property
for a gross sales price of $11.25 million; and
- Declared and paid a 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 operating
partnership units of American Farmland Company L.P. for the second
quarter of 2016.
Financial and Operating
Highlights
Net loss attributable to the Company was $(1.3) million, or
$(0.08) per diluted share, for the second quarter of 2016, as
compared to net income of $0.2 million, or $0.02 per diluted share,
for the second quarter of 2015. The net loss was impacted by higher
depreciation due to the larger depreciable asset base and higher
professional fees and general and administrative expenses
associated with operating as an independent public company as
compared to the prior year quarter. Included in net loss for the
second quarter of 2016 were charges of approximately $189 thousand
for legal fees related to the ongoing strategic alternatives review
process and approximately $104 thousand for settlement of the
initial public offering capital compensation fee due to the
Company’s Agricultural Sub-Advisor. Both of these expenses are
considered one-time in nature and have been added back to net loss
in the calculation of Core FFO attributable to the Company. Core
FFO attributable to the Company was $(0.1) million, or $(0.01) per
diluted share, for the second quarter of 2016, as compared to $1.4
million, or $0.13 per diluted share, for the second quarter of
2015.
Total operating revenues for the second quarter of 2016 were
$3.1 million, an increase of $0.3 million or 9.5%, as compared to
the second quarter of 2015. The increase in total operating
revenues over the prior year quarter was primarily due to higher
fixed rent in the incremental amount of $1.1 million primarily
driven by new leases at properties acquired during the first
quarter of 2016 (the Sun Dial properties which include Cougar
Ranch, Cheetah Ranch, Puma Ranch and Lynx Ranch) and the third
quarter of 2015 (the second and smaller tranche of Golden Eagle
Ranch and Kingfisher Ranch), higher real estate tax recoveries in
the amount of $0.1 million, which increases were largely offset by
a $1.0 million decrease in participating rent driven by the first
tranche of Golden Eagle Ranch.
Total operating revenues for the Company’s same-property farms
were $2.0 million for the quarter ended June 30, 2016, a decrease
of $0.9 million, or 30.5%, from $2.8 million for the quarter ended
June 30, 2015. 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 Sun Dial properties
acquired during the first quarter of 2016 (Cougar Ranch, Cheetah
Ranch, Puma Ranch and Lynx Ranch) and the properties acquired
during the third quarter of 2015 (the second tranche of Golden
Eagle Ranch and Kingfisher Ranch). The decrease in same-property
total operating revenues was entirely due to $1.0 million of lower
participating rent driven by lower participating rent from the
first tranche of Golden Eagle Ranch, slightly offset by higher
fixed rent in the amount of $0.1 million helped by the new tenant
lease at Blue Cypress Farm, which was moved from development in the
first quarter of 2016 when the property was placed under its first
commercial lease.
NOI for the second quarter of 2016 was $2.5 million as compared
to $2.4 million the second quarter of 2015. The NOI increase over
the prior year quarter was primarily due to the NOI contribution
from recently acquired farms, largely offset by the decrease in NOI
at Golden Eagle Ranch.
All of the Company’s non-development farms were under lease as
of June 30, 2016.
2016 Outlook
Golden Eagle Ranch is expected to earn the remaining
participating rent pertaining to the 2015 crop during the third
quarter of 2016, in an amount comparable to or greater than that
earned during the second quarter of 2016. For the full year 2016,
the Company expects that approximately 75% of 2016 participating
rent will be earned during the fourth quarter of 2016. The
Company’s vineyards, including Kimberly Vineyard and Quail Run
Vineyard, are expected to generate substantially all of their
participating rent from the 2016 crop season in the fourth quarter
of 2016, due to the timing of wine grape harvests and recognition
of sales as the grapes are under contracts which set fixed prices.
The Company’s Blue Heron Farms (walnuts) and Kingfisher Ranch
(pistachios) are expected to generate a material portion of their
participating rents from the 2016 crop season in the fourth quarter
of 2016, due to the timing of harvests and selling cycles for these
commodities. Finally, the Company’s Cheetah Ranch and Cougar Ranch,
citrus farms recently acquired during the first quarter of 2016 as
part of the Sun Dial acquisition, are expected to produce
substantially all of their 2016 participating rent from the
2015/2016 crop season in the fourth quarter of 2016, due to the
timing of harvests and pooled sales process for the citrus crops
grown on these properties.
As the Company previously disclosed, Golden Eagle Ranch
generated strong participating revenues in 2015 due to the strength
of its 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 production at Golden Eagle Ranch was
significantly lower than its 2014 crop production due to poor
weather-related growing conditions. Lower 2015 farm production
combined with a decline in almond prices is expected to result in
substantially lower participating rents from Golden Eagle Ranch for
the full year 2016 than were recorded in 2015, as occurred in the
first and second quarter of 2016.
Due to the year over year decline in participating rents
expected from Golden Eagle Ranch during 2016 (from the recognition
of the sale of the 2015 crop harvest), the Company continues to
expect 2016 total operating revenues generated from same-property
farms to be lower in 2016 than in 2015.
Revenues from participating leases exhibit variability from year
to year and are subject to seasonality in the timing of recognition
as well as the amount of participating revenues to be recognized,
due to fluctuating crop prices, variable production yields (subject
to weather conditions and the alternate bearing nature of certain
crops, among other factors), the timing of crop harvests and crop
sales, contracts for minimum price guarantees and any applicable
crop insurance claims (settlement amounts and timing of
settlements). Variability in crop revenues from year to year is
common in the farming industry, and we therefore expect variability
in the Company’s participating rents to continue as long as we
continue to use participating lease types.
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 of NAV to Company stockholders’ equity.
Disposition Activities
On July 27, 2016, the Company completed the sale of its Hawk
Creek Ranch pistachio development property for a gross sales price
of $11.25 million. The property, which was not expected to be under
commercial lease until 2021, was listed with a broker prior to the
Company announcing its strategic alternatives review process. The
net proceeds (net of transaction costs) of $10.8 million were used
to pay down the outstanding balances under the Company’s revolving
credit facilities in the amount of $6.0 million, to fully pay down
the Legacy performance fee payable to the Agricultural Sub-Adviser
(and accrued interest thereon) in the amount of $1.1 million, with
the remainder held in cash. The Company expects to realize a gain
on the sale of approximately $2.2 million. The Company currently
has no other individual properties listed for sale.
Development Activities
The development of Blue Cypress Farm, located in Brevard County,
Florida, was substantially completed and a short-term, transitional
lease was executed during the first quarter of 2016. As a result,
Blue Cypress Farm was reclassified from the development segment to
the specialty/vegetable row crop segment for the first quarter of
2016. The tenant on Blue Cypress Farm has planted and harvested a
first commercial crop, and is in the process of planting a second
crop with harvest expected during the Fall of 2016. The current
lease for Blue Cypress Farm expires December 31, 2016, and the
Company expects to engage in discussions concerning a new lease
prior to year-end.
The Company had five farms in development as of June 30, 2016,
representing 14% of total assets. Operating loss from development
farms was $(0.1) million for the second quarter of 2016.
As noted above, subsequent to quarter-end the Company sold its
Hawk Creek Ranch pistachio development property for a gross sales
price of $11.25 million.
Financing Activities
As of June 30, 2016, approximately $81 million was outstanding
under the Company’s 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 London Interbank Offered Rate plus
130 basis points (approximately 1.95% as of June 30, 2016) 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 June 7, 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 Company, L.P. for the first quarter of 2016. The
dividend was paid on June 30, 2016 to stockholders of record of the
Company at the close of business on June 27, 2016. The distribution
was paid on June 30, 2016 to unitholders of record of American
Farmland Company, L.P. at the close of business on June 27,
2016.
CFO Transition
On August 10, 2016, the Company’s Chief Financial Officer,
Andreas Spitzer, resigned to pursue other professional
opportunities. Mr. Spitzer will depart the Company on August
26, 2016 following an orderly transition of his duties to
Geoffrey Lewis, Director and Treasurer. Mr. Lewis had previously
served as Chief Financial Officer from the Company’s inception
until Mr. Spitzer’s appointment to the role. Mr. Spitzer’s
departure did not result from any disagreement regarding the
Company’s financial reporting or accounting policies, procedures,
estimates or judgments, any deficiency in the Company’s internal
controls or any error in the Company’s reported financial
results.
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, located
in select major agricultural regions throughout the United States.
As of the June 30, 2016, the Company’s portfolio consisted of 22
farms in aggregate located on both coasts as well as in the Corn
Belt and the Delta regions and consisted of approximately 18,322
gross acres of farmland, with more than 21 major crop types
(approximately 40 when including crop varieties). The Company
typically consolidates farms in the same area and crop types into a
single financial unit for reporting purposes although they may not
be contiguous land parcels.
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 attributable to the
Company 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 attributable to the Company 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) attributable to the Company
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 (or due diligence costs incurred in
non-consummated transactions), and (iii) other income and expense
items considered to be one-time in nature (including the
expense related to the Company’s Internalization Transaction
incurred concurrent with the 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, (iii) non-real estate
depreciation and amortization expense, if any (iv)
straight line rent adjustments, and (v) above and below market
lease amortization adjustments.
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 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 attributable
to the Company 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)
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, which, to calculate NOI, is adjusted to add
back net income attributable to non-controlling interests, income
tax expense, loss or gain on sale of assets, other expense
(principally interest expense), depreciation, straight line rent
adjustments, amortization of acquired above and below market lease
intangibles, management and performance fees-related party,
acquisition-related expenses (or due diligence costs on
non-consummated transactions), professional fees (excluding
incurred at the property operating level), sub-advisory fees, and
general and administrative expenses. However, NOI should only be
used as a supplemental measure of the Company’s financial
performance and does not represent an alternative to net income
attributable to the Company as an indicator of the Company’s
performance or “Cash Flows from Operating Activities” as determined
by GAAP. Other REITs may use different methodologies for
calculating NOI and, accordingly, the Company’s NOI may not be
comparable to other REITs’ NOI.
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. The Company
believes that stockholders’ equity of the Company is the most
directly comparable GAAP measure to NAV. 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 historically relied on independent third-party
appraisal firms that employ a certified appraiser with local
knowledge and expertise who is certified as either an A.R.A. or
M.A.I. appraiser or state certified as a Certified General Real
Estate Appraiser or a Certified General Appraiser and who performed
their formal appraisals as of December 31 in each calendar
year for each property (except as noted below). 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. Each full appraisal was
prepared in conformity with the Uniform Standards of Professional
Appraisal Practice and utilized at least one of the following three
approaches to value:
(i) the cost approach, which establishes value
by estimating the current costs of reproducing the improvements
(less loss in value from depreciation) and adding land value to it;
(ii) the income capitalization approach, which establishes value
indicated by the subject property's net earning power based on the
capitalization of income; and/or (iii) the comparable sales
approach, which establishes value indicated by recent sales of
comparable properties in the market place,
with each approach leading to a final opinion of the appraised
value of the subject property by the appraiser. The income
capitalization approach is very sensitive to the final
capitalization rate chosen, with small changes in the
capitalization rate resulting in significant changes in market
value. Factors considered during the land valuation process
utilized for the comparable sales approach, include, among others,
prominence of location, size, shape, availability of utilities,
zoning, topography, property rights, financing, property
improvements, market conditions and land use mix. Though the three
approaches are interrelated and one or more of the approaches may
be selected by the appraiser depending on applicability, generally
in the appraisal of agricultural property, the comparable sales
approach is most often utilized. In the case of our development
properties, the cost approach tends to be more frequently relied
upon due to the lack of (i) income (as the properties are
under development and are not bearing crops that generate
commercial income) and (ii) comparable sales of cropland farms
undergoing development (sales are typically either of raw land or
of mature farms), and in the early years of development until the
farm is producing a commercially viable crop, despite the
potentially significant capital expenditures, development
properties are often compared to raw land, which may significantly
undervalue the property. 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 identify any viable
strategic alternatives, execute any strategic alternative, or
achieve the plans, intentions or expectations (including enhancing
shareholder value) 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. Estimates of the
Company’s value, such as net asset value (NAV), are based on a
variety of assumptions and there can be no assurances that such
estimates will prove accurate. 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 identify and implement any
viable strategic alternatives, 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-K
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
(Unaudited)
June 30, 2016 December 31, 2015 ASSETS:
Investments in real estate—net $ 236,896,814 $ 171,342,731 Cash and
cash equivalents 2,373,808 14,518,788 Rent receivable 1,050,150
1,766,254 Deferred financing costs, net 493,808 558,992 Other
assets 507,818 2,099,336 Total assets $ 241,322,398 $
190,286,101 LIABILITIES AND EQUITY: LIABILITIES: Borrowings under
credit facilities $ 80,950,000 $ 27,200,000 Accrued expenses and
other liabilities 3,217,784 2,377,305 Legacy performance fee
payable to Agricultural Sub-Adviser 1,106,307 1,106,307 Unearned
rent 3,394,761 834,858 Total liabilities
88,668,852 31,518,470 Commitments and contingencies EQUITY:
Common stock, $0.01 par value—300,000,000 shares authorized;
16,921,897 shares issued and outstanding at June 30, 2016 and
16,890,847 shares issued and outstanding at December 31, 2015
169,219 168,908 Additional paid-in-capital 150,075,554 149,846,969
Accumulated deficit (22,983,242 ) (17,644,793 )
Company stockholders’ equity 127,261,531 132,371,084
Non-controlling interests in operating partnership
25,392,015 26,396,547 Total equity 152,653,546
158,767,631 Total liabilities and equity $ 241,322,398 $
190,286,101
AMERICAN FARMLAND COMPANY AND
SUBSIDIARIES
Consolidated Statements of
Operations
(Unaudited)
For the Three Months Ended June 30, For the Six
Months Ended June 30, 2016 2015
2016 2015 OPERATING REVENUES: Fixed rent $
2,294,702 $ 1,165,399 $ 4,376,534 $ 2,536,293 Participating rent
555,329 1,507,503 692,117 2,329,564 Recovery of real estate taxes
223,878 114,368 407,350 230,759 Other income 3,750
23,750 27,500 41,800 Total operating revenues
3,077,659 2,811,020 5,503,501 5,138,416
OPERATING EXPENSES: Depreciation 1,109,141 449,314 2,063,972
893,294 Management and performance fees—related party — 1,335,651 —
2,024,796 Property operating expenses 586,758 364,172 1,171,866
804,414 Due diligence costs on non-consummated transactions — —
136,862 — Professional fees 450,320 135,130 844,569 234,311
Sub-advisory fees 800,061 — 1,446,133 — General and administrative
expenses 1,084,835 81,700 2,694,240
146,715 Total operating expenses 4,031,115 2,365,967
8,357,642 4,103,530 OPERATING (LOSS) INCOME
(953,456 ) 445,053 (2,854,141 ) 1,034,886
Interest income (807 ) (352 ) (1,679 ) (898 ) Interest expense and
financing costs 444,985 117,630 817,583
213,490 Total other expense 444,178 117,278
815,904 212,592 (LOSS) INCOME BEFORE LOSS ON SALE OF ASSETS
(1,397,634 ) 327,775 (3,670,045 ) 822,294 Loss on sale of assets
— — (7,258 ) — (LOSS) INCOME BEFORE
INCOME TAXES (1,397,634 ) 327,775 (3,677,303 ) 822,294 Income tax
provision 107,694 — 141,747 79,832 NET
(LOSS) INCOME (1,505,328 ) 327,775 (3,819,050 ) 742,462 Less net
(loss) income attributable to non-controlling interests
(226,316 ) 133,981 (595,838 ) 262,738 NET
(LOSS) INCOME ATTRIBUTABLE TO THE COMPANY $ (1,279,012 ) $ 193,794
$ (3,223,212 ) $ 479,724 (LOSS) EARNINGS PER WEIGHTED AVERAGE
COMMON SHARE: Basic and diluted $ (0.08 ) $ 0.02 $ (0.19 ) $ 0.04
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING: Basic and
diluted 16,921,897 10,890,847 16,911,490 10,890,847
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.
For the Three Months Ended June 30,
For the Six Months Ended June 30, 2016
2015 2016 2015 Net (loss) income
attributable to the Company $ (1,279,012 ) $ 193,794 $ (3,223,212 )
$ 479,724 Loss on sale of assets — — 7,258 — Depreciation 1,109,141
449,314 2,063,972 893,294 Non-controlling interests' share of above
adjustments (179,601 ) (77,253 ) (335,550 )
(153,495 ) FFO attributable to the Company (349,472 )
565,855 (1,487,532 ) 1,219,523 Weighted average shares 16,921,897
10,890,847 16,911,490 10,890,847 FFO attributable to the Company
per share $ (0.02 ) $ 0.05 $ (0.09 ) $ 0.11 FFO attributable
to the Company (349,472 ) 565,855 (1,487,532 ) 1,219,523
Performance fees—related party(1) — 929,672 — 1,206,530 Due
diligence costs on non-consummated transactions — — 136,862 —
One-time expenses(2) 303,372 — 638,442 — Non-controlling interests'
share of above adjustments (49,124 ) (114,486 )
(125,622 ) (150,902 ) Core FFO attributable to the
Company (95,224 ) 1,381,041 (837,850 ) 2,275,151 Weighted average
shares 16,921,897 10,890,847 16,911,490 10,890,847 Core FFO
attributable to the Company per share $ (0.01 ) $ 0.13 $ (0.05 ) $
0.21 Core FFO attributable to the Company $ (95,224 ) $
1,381,041 $ (837,850 ) $ 2,275,151 Amortization of deferred
financing costs 33,923 15,811 67,861 30,372 Straight line rent
adjustment(3) (14,036 ) (827 ) 1,261,537 1,172 Stock based
compensation expense 16,389 — 300,302 — Non-controlling interests'
share of above adjustments (5,734 ) (2,576 )
(264,020 ) (5,420 ) AFFO attributable to the Company (64,682
) 1,393,449 527,830 2,301,275 (1) 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 Offering, these
fees were no longer payable. (2) During the first quarter of 2016
the Company incurred $335,070 of recruitment fees and compensation
expenses (whereby the Company paid for incentive compensation
forgone with a prior employer) in the hiring of an executive.
During the second quarter of 2016 the Company incurred costs of
$199,352 related to the ongoing strategic alternatives review
process comprised primarily of professional legal fees, as well as
$104,020 of initial public offering capital compensation fees owed
to the Agricultural Sub-Advisor. (3) For the six months ended June
30, 2016, includes the straight-line rent adjustment related to the
cash rents received for the portion of the 2015/2016 crop season
which commenced in advance of the lease commencement dates for the
Sun Dial properties, which rents are being recognized as operating
revenues on a straight-lined basis over the respective lease terms.
The Company received $1.9 million of cash rents from the four Sun
Dial properties during the first quarter of 2016 and recorded GAAP
fixed rent operating revenues of $0.6 million for these four
properties.
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.
For the Three Months Ended June 30,
For the Six Months Ended June 30, 2016
2015 2016 2015 Net (loss) income
attributable to the Company $ (1,279,012 ) $ 193,794 $ (3,223,212 )
$ 479,724 Net (loss) income attributable to non-controlling
interests (226,316 ) 133,981 (595,838 ) 262,738 Income tax
provision 107,694 — 141,747 79,832 Loss on sale of assets — — 7,258
— Total other expense 444,178 117,278 815,904
212,592 Operating (loss) income (953,456 ) 445,053
(2,854,141 ) 1,034,886 Depreciation 1,109,141 449,314 2,063,972
893,294 Straight line rent adjustment(1) (14,036 ) (827 ) 1,261,537
1,172 Management and performance fees—related party — 1,335,651 —
2,024,796 Due diligence costs on non-consummated transactions — —
136,862 — Professional fees(2) 435,958 131,693 820,722 229,146
Sub-advisory fees 800,061 — 1,446,133 — General and administrative
expenses 1,084,835 81,700 2,694,240
146,715 NOI $ 2,462,503 $ 2,442,584 $ 5,569,325 $ 4,330,009 (1)
For the six months ended June 30, 2016, includes the
straight-line rent adjustment related to the cash rents received
for the portion of the 2015/2016 crop season which commenced in
advance of the lease commencement dates for the Sun Dial
properties, which rents are being recognized as operating revenues
on a straight-lined basis over the respective lease terms. The
Company received $1.9 million of cash rents from the four Sun Dial
properties during the first quarter of 2016 and recorded GAAP fixed
rent operating revenues of $0.6 million for these four properties.
(2) Excludes professional fees incurred at the property operating
level.
Reconciliation of Net Asset Value (NAV) per Share to Company
Stockholders’ Equity
The following table provides a reconciliation of Net Asset Value
(NAV) per fully diluted share to Company stockholders’ equity as of
December 31, 2015.
As of December 31, 2015 Company
stockholders' equity $ 132,371,084 Revaluation adjustment
attributable to the Company(1) 37,419,678 Company
stockholders\' equity determined on the basis of
fair value(2)
169,790,762 Number of fully diluted common shares outstanding
16,890,847 NAV per share(3) $ 10.05 (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 Offering and giving
effect to the $2.52 per share dilutive effect of the Offering and
Internalization Transaction was $9.64 per share.
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version on businesswire.com: http://www.businesswire.com/news/home/20160815006056/en/
American Farmland CompanyLindsey Sichel or Andreas Spitzer,
212-484-3000www.americanfarmlandcompany.com
Grafico Azioni AMERICAN FARMLAND CO (AMEX:AFCO)
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