Good day, ladies and gentlemen, and welcome to the Gladstone Land Corporation’s First Quarter Ended March 31, 2019 Earnings and Webcast Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

[Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. David Gladstone. Sir..

Alright. Thank you, Lorene. Nice introduction. This is David Gladstone and welcome to the quarterly conference call for Gladstone Land, and thank you all for calling in today. We always appreciate taking time to listen to questions that you give us and we think you would get a lot of information out of our presentation.

We always start with our lawyer, Erich Hellmold, who’s going to give the invitation to listen. Go-ahead Erich..

Thanks, David and good morning. Today's report may include forward-looking statements under the Securities Act of 1933 and the Securities Exchange Act of 1934, including those regarding our future performance.

These forward-looking statements involve certain risks and uncertainties that are based upon our current plans, which we believe to be reasonable.

Many factors may cause our actual results to be materially different from any future results expressed or implied by these forward-looking statements, including all risk factors in our Forms 10-Q, 10-K, and other documents we filed with the SEC.

Those can be found on our website www.gladstonefarms.com, specifically the Investor Relations page or on the SEC's website. We undertake no obligation to publicly update or revise any of these forward-looking statements whether as a result of new information, future events, or otherwise except as required by law.

Today, we will discuss FFO, which is Funds From Operations. FFO is a non-GAAP accounting term defined as net income, excluding the gains or losses from the sale of real estate and any impairment losses from property, plus depreciation and amortization of real estate assets.

We'll also discuss core FFO or CFFO, which we generally define as FFO adjusted for certain non-recurring revenues and expenses, and adjusted FFO or AFFO, which further adjusts core FFO for certain non-cash items such as converting GAAP rents to normalized cash rents.

We believe these are better indications of our operating results and allow better comparability of our period-over-period performance. Please take the opportunity to visit our website www.gladstonefarms.com, and sign up for our email notification service so you can stay up to date on the company. You can also find us on Facebook.

Keyword, The Gladstone Companies. And we have our own Twitter handle @gladstonecomps. Today's call is an overview of our results, so we ask you review our press release and Form 10-Q both issued yesterday for more detailed information. Those can also be found on our Investor Relations page of our website. Now, I'll turn the presentation back to David..

Okay. You’re in for treat today. We’ve decided to leave out of these quarterly calls to stockholders, the history of the company, and the basic operation strategy. So, we are streamlining it down just to make sure you get the basics.

Much of that stuff about the history, as well as the basic operations on our website and we hope you go to the website and read all about us and we are at GladstoneLand.com. This quarter, our acquisitions got off to a really slow start. Couple of our acquisitions were delayed for minor reasons.

I think we’ll pick those up in this quarter, but the second quarter has already started off okay and our current backlog of potential acquisitions of farms is – well as strong as we’ve ever seen. So, we’re hoping to have some really strong results for you in the coming months.

We were successful in releasing front, we now have 100% occupied, so great shape. Looking at the total farm land ownership, we currently have 87 farms in 10 states with about 75,000 acres. The value of these farms is about $649 million. Our farms are located in 21 different growing regions and we grow over 40 different crop types.

Our farms are leased to 64 different tenants all of whom are unrelated to us. Now, let’s move over to some recent activity. During the quarter, we acquired one small farm in Nebraska for about $2 million and that grows popcorn and edible beans and right after the quarter end, we bought a large pistachio farm in California for about $29 million.

Overall, the initial net yield on these farms was about 6.6% and leases on both of the farms also contained certain provisions such as annual escalations or participation rents. That should push the figure much higher.

On the leasing front, we continue to have quite a bit of leasing activity on our existing properties, overall during and after the quarter we either executed new leases or extended the existing leases on 10 of our properties.

In total, new leases will result in a small increase in a minimum fixed cash rents and in addition three of the new leases include a participation rent component, whereas only one in the prior leases did. I like these participating rents.

Last year, that is ending 12/31/2018, we had about $1.2 million of participation rents and we’re hopeful that it will be even more in this year that we’re in. As of today, our farms are 100% leased and we don’t have any leases expiring over the next six months.

We do have two leases expiring in December of this year and it’s about 2% of our total minimum annualized rents. So, we’re not too worried about that, but we’re working on it.

We do have some leases scheduled to expire in 2020 and we’ve begun negotiations with both existing and potential new tenants on more significant – these are more significant larger farms and one of them we now have three groups that are buying to be on that farm.

We expect to be able to renew all the leases that are coming up and we’ll have some more progress report for you on our next call certainly and maybe along the way.

Now, our capital raising efforts during the quarter, since quarter end, we raised about $25 million in new proceeds through the sale of our non-traded Series B preferred stock, and just as a reminder we plan to list that Series B preferred stock on NASDAQ within one year of the completion of the offering.

We’re trying to raise $150 million and have done very well in the first nine months. Everybody will get liquidity and then we’ll have a preferred stock that trades on a regular basis. Now, in the process of these sales, we’ve paid certain sales commissions and broker dealer fees to our wholly-owned subsidiary Gladstone Securities.

It’s a wholly-owned securities of Gladstone Capital or Gladstone Management. This is an affiliated broker dealer because our parent company owns it and it’s a conduit for this offering as it pays out almost all of the fees to other unrelated third parties involved in the offering such as the participating broker dealers and the wholesalers.

To-date, it's paid out about 94% of the fees that we’ve earned in Gladstone Securities to third parties who are helping us sell it, they’re not related to us. And again, the point of the Series B is to allow us to grow our portfolio at a steady pace. We have money coming in every month from this.

This pace is without having to sell as many common shares and which you know immediately dilutes the value of the common stock. We look at the Series B Preferred Stock as a way to augment our long-term capital needs and it also will produce a preferred stock that has some ability to raise money going forward.

Well that’s enough on the operations; let’s go over to Chief Financial Officer, Lewis Parrish to talk about your numbers.

Lewis?.

Alright, thank you David, and good morning everyone. I'll begin by discussing our balance sheet.

During the first quarter, our total assets increased by about $10 million or 2%, primarily due to cash proceeds received from sales of our Series B Preferred Stock, as well as the one new farm we acquired during the quarter, which was funded through a combination of new fixed rate, borrowings, and proceeds from a preferred stock sales.

From a financing perspective, in addition to proceeds from equity issuances, we also secured that one loan from a new lender and it will carry an effective interest rate of 4.7% that is fixed for the next 4.7 years. From a leverage standpoint, on a fair value basis, our loan-to-value ratio on our total farmland holdings was about 50% at March 31.

We were comfortable at this level given the relative low risk of high-quality farmland as an overall asset class. While interest rates continue to be volatile, over 98% of our borrowings are currently at fixed rates and our on a weighted average basis these rates are fixed at 3.57% for another six years out.

So, we believe we are currently well protective on the desk side against any further interest rate hikes. Regarding upcoming debt maturities, we have about $31 million coming due over the next 12 months.

However, about $22 million of that represents the maturities of [three bullet loans coming due] either at the end of 2019 or in the beginning of 2020.

Given that the three properties collateralizing these loans have increased in value by an aggregate $2.2 million since their respective acquisition, we don’t expect to have any problems refinancing each of these loans with either the current lender or potentially new lenders.

So, moving those maturities, we only have about $9 million of amortizing principal payments coming due over the next 12 months or little less than 3% of our total debt outstanding. Now, move on to our operating results.

First [I’ll note], that we had net income for the quarter of about $108,000 and we had a net loss to common shareholders of about $493,000 of $0.03 per common share. Compared to the prior quarter, our adjusted FFO increased by about $186,000 or 8%.

While AFFO per share remained flat at $0.133 per share equaling the common distributions declared in each quarter.

From a cash earnings respective, while rental income from fixed based rents increased slightly from the prior quarter, our total rental revenues decreased by 3% and that was just due to the amount of participation in rents that we recorded during Q4 last year, and those will generally get recorded during quarters 3 and 4 of fiscal year.

Core operating expenses decreased by about $32,000 or 2%.

We continued to incur higher property operating expenses, due to ongoing cost to rent generators to power newly drilled wells and additional repairs and maintenance expenses we performed in one of our properties, as well as one final payment made related to getting certain permits in place on another one of our properties.

The delivery of the new generators was delayed from our initial expectations, which led to the continuation of these costs.

However, the first batch of generators was delivered to the property in April, another one is getting delivered next week, and then the final delivery is scheduled to take place in June, and the permitting issue on our other property has now been fully resolved.

So, we hope to be able to show a reduction in our property operating expenses for Q2 with a return to a more normalized amount coming in the third quarter. The increase in property operating expenses was offset by a decrease in our aggregate related party fees, which was driven by credit granted to us by our advisor during the current quarter.

We also recognized additional income during the current quarter due to interest patronage received on certain of our borrowings from farm credit. However, this was offset by the drag on earnings caused by dividends owed on new issuances of our Series B Preferred Stock as we weren’t able to invest those proceeds until right after quarter-end.

However, this money is now being put to work, so we don't anticipate this being the case for the second quarter. Now, we move on to net asset value. We had 29 farms revalued for the quarter, all via independent third-party appraisals. We got a slight increase in the overall value, of about $168,000, but growth overall is relatively flat.

As of March 31, our farms were valued at about $620 million, all of which was valued based on either third-party appraisals or the actual purchase prices.

And based on these updated valuations and including the fair value of our debt and all of our preferred stock, our net asset value per share at March 31, was $12.30, which is down by $0.58 or 4.5 % from last quarter.

The primary drivers of this decrease were decreases in longer term market interest rates, interest rates, which increased the fair value of our fixed rate long-term borrowings, as well as ongoing capital improvements we are making on certain of our farms, the values of which won't be reflected in the farm's fair values, until the respective projects are complete.

And turning to liquidity, including one unencumbered property and availability on our lines of credit, we currently have about $38 million of dry powder, which translates into roughly $60 million of buying power for straight cash acquisitions.

But we also have the ability and intent to issue new OP units as consideration for purchases, if the opportunity arises. And we're now generally completing two closings per month of the Series B Preferred Stock, so we expect to receive additional proceeds through future sales of that as well.

Finally, we have ample availability under our largest borrowing facility, and we continue to be in discussions with potential new lenders for either additional facilities or individual borrowings.

But overall, credit generally remains readily available to us and we have plenty of room and ability to continue borrowing and buying new farms that meet our investment criteria. With that, I'll turn the program back over to David..

Good report, Lewis. Our list of potential farms to buy is extremely healthy today. It's nearing 200 million, so we hope to be in very good shape. I'll go out on a limb, and say we'll probably be over $800 million, and if we got all of it closed, we'd be $850 million in 2019.

And I'm hopeful that we hit the magic number that I like so much in 2020, which is $1 billion. So that gives you a heads up of where we're going.

And just a few final points I'd like to make; as most of you know, our fund specializes in farms that grow fresh fruits and vegetables and farms that grow nuts and other tree crops like apples, cherries, figs.

One reason for this is, we believe these farmlands growing crops that contribute to healthy lifestyles such as fruits and vegetables and nuts, mirror the trends that we see in the marketplace, and that it will continue and switch toward more healthy foods.

Currently, over 85% of our total revenues comes from farms that are growing these types of food, and that you can find in either the produce or the nut section of your local grocery store. We consider these foods to be among the healthier type of foods, and we're seeing a growing trend toward organic.

And among these foods’ groups, that’s especially true of produce section of your grocery store, you see that growing and a whole section is devoted out now to organically grown. In addition, over 40% of our fresh produce acreage is either organic or transitioning to become organic. That's over 20% of our permanent crops.

That is the nuts and those things on trees or organic. The organic sector continues to be a strong growth area. In addition, over 95% of our portfolio is GMO free. We've got a few farms in the Midwest that's got a little bit of GMO in it, but that's being watered down, as we're not doing more GMO.

Another major reason why our business strategy is focused on farmland growing fresh produce, is due to the effect of inflation on particular segment. According to the Bureau of Labor Statistics, the overall annual CPI generally keeps pace with inflation.

However, over the past 20 years, the fresh fruits and vegetables segment of the crop has outpaced the total food CPI by a multiple of 1.7 times. So, inflation is heavier in the fresh food side.

And while prices of commodity crops are typically more volatile and susceptible to competition from other parts of the world, fresh produce is mostly insulated from global volatility, mainly because the crops are generally consumed locally within a short timeframe, after being harvested.

Ultimately, we believe that farmland is GMO free and growing healthier crops, such as fruits and vegetables, they're going to continue to outperform the overall farmland market in terms of both cash returns and long-term value appreciation.

Overall, demand for primary farmland growing fruits and vegetables remains very stable and very strong in many places. And this is mostly along the West Coast, including most of California, Oregon and Washington and the East Coast, especially Florida.

Farmland overall continues to perform extremely well, compared to other asset classes, despite some of the downturn in certain regions.

This is the index of farmland, which is currently made up of about $10.4 billion worth of agricultural properties, has an average annual return over the last 15 years of 14.7%, and that compares very favorably with the 6.9% in the S&P index.

And you should know that during these 15 years, the farmland index has never had a negative year like the two years S&P had during the Great Recession.

Farmland has generally provided investors with a safe haven during turbulent times in the financial marketplace, in both land prices and food prices, especially for fresh produce continue to rise steadily. As you know, we recently raised our dividend again to $0.0445 per share per month, that's a rate of about $0.534 per year run rate.

Over the past 52 months, we've raised our dividend 14 times, resulting in an overall increase of 48% in our monthly distribution rate to shareholders over this timeframe. And this is a reflection of the wonderful accomplishments of the team here.

The agricultural experts, the financial people, they're all very experienced at finding and managing high quality farms, paired with strong tenants generally reliable in their rental payments. Our goal is to continue to increase the dividend that outpaces inflation, and I think we're doing a good job of that.

As you know, I'm the largest shareholder and I'm definitely liking the dividend increases. Since 2013, we made 75 consecutive monthly distributions to stockholders, totaling $4.04 per share total distributions. Paying distributions to our shareholders is the paramount important thing for this business. We are in essence, a dividend paying company.

We're not out to set records on stock prices, but stock prices doing okay. We were at about $13.54 at our current distribution run rate, where the stock is priced today at about $12.50 a share. That's a 4.27% return on investment paid out in dividends, and this is right in line with the average yield across the entire REIT index today.

But when you consider the relative stability of the underlying assets you're investing in our stock. I just think the stock offers a wonderful alternative to those who are worried about inflation and price changes. We do have a preferred stock that is a little over 6.1% return, and we also are doing our Series B, which pays 6%.

So, all of this is looking extremely good now in terms of the base of this company. Please remember that purchasing stock in this company is a long-term investment in farmland. I think an investment in our stock really has two parts. It's similar to go and that it is an asset that doesn't go away, it's dirt.

It has an intrinsic value because there's a limited amount of it, and it's being used up by urban development. And unlike gold, it's an attractive investment, because it has cash flow to investors. And we believe this is better than a bond fund because it keeps increasing the dividend.

We expect inflation, particularly in the food sector and we expect it to grow and we expect the values of the underlying farmland to increase as a result, which is especially true in fresh produce section, has been demonstrated by the last 15 years.

So, I think it's just a good way to look at our farmland for – first as a hedge against inflation, both in food prices and other areas, and second looking for an asset that doesn't correlate to the overall stock market. And we believe this is the one.

So, if you like what we're doing, please buy some stock and keep eating fresh fruits and vegetables and nuts, and now, the operator will come on and give the instructions on how to ask some questions..

Thank you, David. [Operator Instructions] Our first question comes from Rob Stevenson with Janney. Your line is open..

Hi, good morning guys.

David, can you provide an update off of the 8-K that you guys filed on the RTS Orchard transaction and when that's part – when that's supposed to close and if it's in multiple parts or one transaction as a whole?.

Yes. We've got Q1, and then there's probably a Q4 coming up. I'm sorry Q2….

Q3 and Q4..

It keeps slipping. Q3 and Q4 is where we are expecting those two pieces to close..

Okay.

So, roughly half each – is it roughly divided in half, or is it skewed?.

That's right. No, it's….

Okay. Alright.

And the $29 million pistachio acquisition in the second quarter was not part of that, that's a totally separate transaction, is that correct?.

Different transaction. Love those pistachios..

Okay. And then in terms of the Series B preferred, so, you know you guys have issued – year-to-date, I think its roughly sort of $25 million. You're targeting $150 million and then listing thereafter.

What are you guys thinking in terms of the overall sort of limitations of preferred in the capital stack? If you're $150 million there then, I think the Series A is, call it roughly $30 million or something like that? You guys would be $180 million, if my math is correct there, of preferred, which is a sizeable percentage of your equity?.

Yes. That that should do it. Although – it's not coming in as you know, quickly, so it probably won't get to that $150 million until maybe 2021. We might do it in 2020, but I doubt it.

So, the goal is to keep that coming in at a slow rate, and it's doing about $5 million a month, and as a result of that coming in at a slow pace, we can put it to work pretty quickly, rather than having an offering that gives us $20 million, $30 million, $40 million all at once. And on the one hand, it's more expensive than common stock on this.

On the other hand, I think that common stock is grossly undervalued. I know most Presidents say that and I agree with that as far as our stocks are concerned. But I'm trying to protect our common stockholders for another year or two, and then we can raise some more stock in the commons area..

But the listing wouldn't occur until you hit the $150 million.

The public listing?.

That's right..

Okay..

The document says, when we get to $150 million, we will list within a year. And if we never get to the $150 million at the end of five years, we will list. We could list a day. We have enough sold. It's more like $55 million or so is sold.

So, $55 million preferred stock will trade, it won't trade as well as $150 million, and we have in our other companies, many of the buyers of preferred stock and they're all looking at this, but they don't want to go in until it's out there listed and running..

Okay. And then, I mean in terms of percentage of the overall cap stack, I mean Lewis, is it – call it somewhere between 20% and 25% that's going to be preferred heavy.

Is that -- do you bring that down over time by issuing common and issuing – and debt or you know is a 20%, 25 % preferred slug in the capital stack something that you guys are comfortable with long term?.

I'm comfortable with that. I see this asset as so stable and long term and paying as agreed, that I don't mind a little extra leverage compared to some of the folks that are out there, simply because of the stability and value of the asset that's holding it all up..

Okay. But is there an upper bandwidth. I mean is – with the Series B, you list at $150 million.

Do you then start a Series C of non-traded preferred, and start ratcheting it up? I mean there are some people out there that have preferred, you know, effective – with preferred effective leverage 75%, 80%, 90% of their market cap?.

Well that certainly doesn't fit with what we're doing. But over time, I'm hopeful that we can balance that out, so everybody feels comfortable with it.

I think if we demonstrate, as we have over the last five years, that these assets are very strong in terms of getting money coming into the company, then we can look at the outflow and determine how we want to set it up.

Do we want to set it up in common, because it does pay a dividend, or do we want to do it in preferred?.

Okay. And then last one for me, how are you guys – I mean, a lot of concentration here in pistachios.

What is it about that crop that leads you to be comfortable with the concentration that you guys will, by year-end, have in pistachio, if the RTS transaction closes?.

Well first of all, you know, those trees last hundred years. So, as a result, we like the fact that you don't have to plant them every year. And most people take out one or two trees that aren't performing well and put in others, but there's not this wholesale change of the asset base in pistachios.

The other thing is the uses of pistachios are putting them into more and more things, I think you can eat granola today without having pistachios in them, and certainly, a lot of the cookie people are putting pistachios in. So, as a result, pistachios are very strong in the marketplace today in terms of usage.

They're even stronger than some, say walnuts. Walnuts are coming along again. But pistachios have taken over, and if you look at the world, Iran used to have most of pistachios, and they still grow a lot. But that's about the only place we compete with.

And California has the pistachio strength that you'll never see in any other part of the world, I don't think, and they're growing lots of them. So, it's you don't want everybody to plant pistachios, simply because that would bring on too many. But right now, it seems to be working just fine..

Okay. Thanks guys..

Next question..

Thank you. [Operator Instructions] Our next question comes from John Massocca with Ladenburg Thalmann. Your line is open..

Good morning..

Good morning..

So, just touching again on the potential of Fresno County acquisition that you have under purchase and sale agreement.

Is there, I know it's kind of, maybe certain things you can't comment on, but are you contemplating – participating interest potentially being part of the lease structure for those acquisitions, and maybe just kind of roughly should the cap rates you expect, be largely in-line with some of the prior acquisitions, notably the one you closed here in 2Q?.

It's really hard to say where you end up in these. But generally speaking, tree crops have a higher interest rate or higher payment out than any other farm. So, as a result, we like it for that reason, and I just look at this and I keep saying to myself, how many do we want? I would like to have more almonds; I'd like to have some walnuts.

So, those areas of the nuts are really terrific areas for long-term value. We've been looking at or we have a lot of different trees, but if you look at trees like cherries, and apples and oranges, they don't have nearly the strength that you see on the nut side of the business.

And so, we've got a few; figs for example are very long – long, long life and there are other trees that have even longer life. So, we're looking at that. We have to study each one of them, particularly you have to look at the market, where are you going to sell these things that you're buying.

For example, when we looked at figs, we were dealing with the largest fig grower in the United States, and probably the world, and he's been at it for 30, 40 years, and we feel very comfortable that he's going to be able to sell these figs either as dried and things like Fig Newtons. We've also looked at some other crops that are long lived.

And I just think tree crops are a wonderful part of a portfolio, and I'm hopeful that we can get more of those, as time goes on. But John, I don't know how to answer your question..

That was helpful though, the color.

And then maybe one last thing, could this transaction potentially involve OP units?.

We only have one on my list that are going to give us some OP units, and that's a farm in Florida. We will do about 6% of the purchase pricing OP units. Once that – and this is another reason to get big, is that once you get up around $1 billion in assets and you're making good money, more people will take OP units than have in the past.

I think all of our people that have taken OP units have converted and sold. I mean they really wanted cash at the end of the day. They made good money. They got in at a time when the price of the stock was less, and they've been able to sell it at a much higher price.

So, I would hold that out to people who are thinking about OP units that most people have been winners, not only in terms of getting a tax-free exchange, but also in selling the stock, the underlying stock from the OP units. I think we bought back one for cash, but everybody else was sold in the marketplace.

And while it put some pressure on the stock. I don't know – we're sort of exempt from all of the things that are going on in China, and all those kinds of those things. The only crop that really is bothered by China, is the almond crop. We don't sell any strawberries to China.

And so, as a result, we're just not looking at all of those things that are going on in terms of tariffs as being problem for us. So, as we look at the world today, I just think we're going to continue to do what we're doing, which is diversifying the crops.

We even have one guy that does mint, I never put that down as a list, but he grows mint, he grinds it up, and bakes it and makes it into a syrup and sells it to some of the chewing gum people. So, we're looking at all the crops, across everything.

And if I could ever figure out how to do something in the Midwest, as we all know, the Midwest people have – there have always been more bankruptcies of farmers in the Midwest that are growing corn and wheat and soy, than any time in the past, except for the Great Recession that we had in the ['29 and '30].

So, I just think there's opportunities out there and we have to study and work and we've got good people here who love to dig into these different crops and we like to go to different areas. For example, we bought some blueberries in North Carolina. We've got two new farms of blueberries in Michigan.

These are interesting crops and that the maintenance is the problem. You've got to maintain the blueberry farms, and that means taking out some of the blueberry bushes. Headlines today, there's a blueberry that blooms twice a year. That would mean that every crop could get twice as much off the crop, if it's replanted.

But nobody's replanting yet because it hasn't been – nobody has done much with that one, and it's just out a year. So, it's constantly changing and our people here are constantly working on things like that, and you know you look at all of these crops that we’ve got.

I think we're so well diversified, both in geographic areas, as well as crops, as well as tenants.

I think we've got a great -- and my goal is to grow the company to the size that will mirror the NCREIF index, because that's been a phenomenal return to shareholders over the years, and if we could get to that, it would be it would be just terrific as a place to invest. It's great today, but we're going to make it better as we keep buying things.

John, other questions?.

Understood. Yes, no – appreciate the color.

You did touch on the Midwest briefly, and I know it isn't a huge portion of your portfolio today, but was there any impact on any of your tenants as a result of kind of the rough winter weather we saw in 1Q?.

No, we were lucky. The floods, as well as the rough winter didn't bother any of ours. We were on high ground.

Years ago, I looked at a farm next to the Mississippi River, and the guys swore to me that when the Mississippi overflowed, it wouldn't bother his farm, and a couple of months later it overflowed and I had a picture of him standing next to the farm, which was published in the newspaper with his farm underwater.

We did have one farm in North Carolina, in which, when that storm came through, it was in blueberries and it went up about a foot on the blueberry, which is a six-foot plant. And so, it didn't really bother them. They couldn't get in to do some of the work they wanted on the farm. But nonetheless, it didn't bother anybody.

So, we've been lucky in terms of having farm to having been bothered by floods. We certainly have had no farm that has been anywhere close to the fires, that have happened in California. So, as of today, we should count our lucky stars, because we don't have a problem. Just as a footnote, we do have insurance, and our farmers have insurance.

So, if a hurricane goes through Florida and blows away something, we'd probably be covered by the insurance. And so, I think we've covered six ways to [Sunday], but there's always something out there that you haven't counted on, and I know it's out there waiting for me, and I just have to be ready for it.

John, any other questions?.

And then just one kind of quick detail question on some of that leasing activity in the quarter.

Was the $420,000 of improvements that were made on some of the new – as a result of some of the new leases, are those going to be generating additional rental revenue, or are those maybe more traditional [PI dollars]?.

Those were [PI dollars], mainly because the two farms that we re-leased and got to a good farmer were taking over from somebody who didn't treat the vines very – the plants very well. And as a result, they needed a lot of trimming, they needed a lot of dirt pulled up around them.

So, as a result, we put up the money to do that, in order to get this wonderful tenant, who looks like he's going to be a great paying tenant to come in and take over those two small properties..

Understood. Thank you so much for all the color. That's it from me..

Okay.

Anybody else got a question?.

I'm not showing any further questions at this time. So, I'd like to turn the call back to you, Mr. Gladstone, for any closing remarks..

Okay. Well we thank you all for calling in and hopefully at next meeting, we'll have some more good news for you. That's the end of this call..

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program, and you may all disconnect. Everyone, have a wonderful day..