Paul Pittman - Executive Chairman, President & CEO Luca Fabbri - CFO.

Dan Archer - FBR David Rodgers - Baird.

Good morning and welcome to the Farmland Partners Fourth Quarter and Full Year 2014 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Mr. Paul Pittman, President and CEO. Please go ahead, Mr. Pittman..

Good morning, and welcome to Farmland Partners fourth quarter and full year 2014 earnings conference call and webcast.

We truly appreciate you taking the time to join us for these calls because we see them as a very important opportunity to share with you our thinking and our strategy in a format less formal and more interactive than public filings and press releases. With me this morning is Luca Fabbri, the Company's Chief Financial Officer.

I will now turn the call over to Luca for some customary preliminary remarks.

Luca?.

Thank you, Paul. First and foremost, I would like to also welcome you to this conference call and webcast and thank you for joining us. The press release announcing our fourth quarter and full year earnings was distributed yesterday evening. A replay of this call will be available shortly after the conclusion of the call through March 30, 2015.

The numbers to access the reply are provided in the earnings press release. For those who listen to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, February 26, 2015 and have not been updated subsequent to this initial earnings call.

During this call we will make forward-looking statements including statements related to the future performance of our portfolio, our identified acquisitions and farm properties under evaluation, impact of acquisitions and financing activities, as well as comments on our outlook for our business, trends in the broader agricultural markets.

We also will discuss certain non-GAAP financial measures including but not limited to FFO and adjusted FFO, EBITDA and adjusted EBITDA.

Definitions of these non-GAAP measures, as well as reconciliations to the most comparable GAAP measures are included in the company's press release announcing fourth quarter and full year earnings which is available on our website www.farmlandpartners.com Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally be on our control.

These risks and uncertainties can cause actual results to differ materially from our current expectations, and we advise listeners to review the risked factors discussed in our press release yesterday after market close and documents we had filed with our with or furnished to the SEC.

I will now like to turn the call back to our Executive Chairman, President and Chief Executive Officer, Paul Pittman.

Paul?.

Thank you, Lucca. I want to spend a few minutes discussing the highlights from our first year as a public company, talk about our goals and strategy for fiscal year 2015 and discuss general markets trends.

2014 was a busy year for our company, of course, the landmark events of the year were our initial public offering in April and our follow-on offering in July. Access to the public capital markets has allowed us to grow dramatically. During 2014, acreage in our portfolio grew over six fold, from 7,300 acres to 46,500 acres as of the end of the year.

Now including a few farms that we have under contract, our portfolio consists of over 49,000 acres. Acquisition activity in the fourth quarter alone, traditionally one of them were active periods in Farmland markets, brought in over 22,000 acres. As of the end of the year we estimate our land portfolio to be worth just shy of $200 million.

With this dramatic growth in acreage has also come a dramatic degree of diversification on all parameters. Our geographic footprint has expanded to eight states from the Cornbell to the high plains, the Mississippi Delta, and the southeast. Our tenant portfolio has grown from an original four tenants of the IPO to approximately 30 tenants today.

Our land portfolios typical crops at the IPO were focused on corn and soybeans we have since added a significant presence in wheat, rice, and corn. In order to achieve this rapid growth and diversification and in order to create a platform for further growth and diversification we have added very confident and dedicated farm managers to our staff.

While our portfolio growth has had only limited impact on our 2014 financial results, as Farmland closings in the fourth quarter after harvest typically do not bring the buyer revenues in that calendar year.

Looking ahead at the expected portfolio performance in 2015, we were able to raise our dividend distribution to a level that we believe is more than covered given 2015 contractual rents. As we focus on 2015, we believe our platform will help us grow in our established regions and find opportunities in other parts of the country.

We will not only try to expand geographically, but we'll also consider adding additional crops such as fruits and vegetables to our portfolio.

Further as we achieve scale in various regions, and build on our relationship with our growing tenant base, we will work on different initiatives that will help create value for our tenants which in turn will both strengthen our tenant base and create value for our company.

Specifically we are currently launching an effort to pool input purchasing across all of our tenants which we expect to drive input costs for these tenants down. This predict potential reduction and tenant input cost will be very beneficial to our Farmland Partners going forward and increased revenue for our company.

In terms of the overall farm economy, commodity prices are obviously lower than a year ago but is it important to see this in the appropriate historical context. For example, the average corn price in 2009-2010 marketing year was only $3.55. In 2010-11 marketing year it went up to $5.18, in 2011-12 it went up to $6.22, and then 2012-13 it was $6.89.

My point here is not that history will repeat itself in exactly the same way but rather to point out the commodities always have and always will trade in cycles. On the other hand Farmland values and rents create based on farmers three to five year view of farm profitability.

All of the long term trends such as growth in global demand for grains, and scarcity of farmland are still firmly in place. We are still seeing some farms sell for record prices, on the other hand modest land value declines have occurred in some regions. We expect the current somewhat negative environment for farm profits to be relatively short-lived.

Reduced plantings, especially of corn in the face of strong demand are expected to lead overtime to commodity price recovery. Our perspective is that the distress some farmers may face during the coming years will actually create buying opportunities for our company.

Please remember that we collect the overwhelming majority of our rents as fixed cash payments upfront for the year, thus protecting us to a large degree from the short term declines in farm profitability. We would expect to continue to have 100% occupancy rates on our farms for 2015 as we did in 2014. Moving on to other important company news, Dr.

Joseph Glauber, the former Chief Economist of the US Department of Agriculture from 2008 to 2014, and its Deputy Chief Economist from 1992 to 2007, has joined our Board of Directors.

Joe’s knowledge of the global agriculture markets gained from decades of experience working in senior positions with the USDA will be very valuable in helping us understand the long term prospects for the farm economy.

An 8-K regarding Dr.Glauber’s appointment was filed yesterday after market close and a more detailed press release will go out next week announcing his appointment to the board. Joe filled the seat left open by Rob Solomon’s resignation due to an increase in travelling work load from his business endeavors.

I would like to thank Rob for his contributions to our company through its first steps in the public markets. With that I will ask Lucca to walk you through some of the key operating and financial highlights contained in our earnings release. And then we'll take questions you may have about this during the Q&A.

Lucca?.

Thank you, Paul. In the fourth quarter of 2014 we built on our momentum from the previous quarter to close on 25 acquisitions in five states.

The closings of these new properties helped to diversify our portfolio geographically as we handed 11,368 acres into Delta, 3,998 acres in Colorado and Nebraska, and entered into a large transaction for seven farms in South Carolina totaling 6,818 acres, also marking our first acquisition in the Southeast.

Additionally as Paul mentioned, we have continued to diversify our tenant base.

During the fourth quarter we also strengthened our relationship with Farmer Mac as we twice increased the maximum amount available to us under our secured not purchased facility from $30 million to $75 million in October, and from $75 million to $150 million in December, and issued four three year interest only bonds for a total of $60.4 million of fixed interest rates ranging from 2.35% to 2.56%.

Now let me turn to our fourth quarter and fiscal year 2014 financial results. As I cover some of the key highlights, please refer to our earnings press release for more details. For the fourth quarter and fiscal year 2014 we recorded a rental income of $1.4 million and $4 million respectively, and net losses of $299,000 and $671,000 respectively.

Due to our high volume of acquisitions in the second half of the year, particularly in Q4, we received partial or no rent payments for 2014 from a number of properties that are included in our portfolio as of December 31, 2014.

As it typical in the industry, farm acquisitions closing late in the year, after harvest, generate no or minimal rent revenue for the acquire. That being said we expect all of the acquired properties to be leased for the 2015 growing season and therefore generate rent revenues in the fiscal year, largely in the first quarter.

Our estimate of revenue generated by the current portfolio in 2015 excluding any properties under contract that we have not yet closed on is $9.2 million including an estimated $1.1 million not derived from fixed cash leases.

Like many other reads, we look at certain non-GAAP measures, particularly adjusted funds from operations or AFFO as additional measures of our performance. We calculate FFO, funds from operations, consistent with the finishing provided by the National Association of Real Estate Investment Trusts.

The key adjustments we make to FFO to arrive at AFFO are to recognize revenue in the calendar year in which the cash rental payment was actually received, to exclude non-cash expenses such as stock compensations, and to exclude certain acquisition related expenses. Our AFFO was $0.4 million for the quarter and $1.3 million for fiscal year 2014.

On a diluted weighted average basis, AFFO per share was $0.04 for the fourth quarter and $0.22 for fiscal year 2014.

When we calculate per share non-GAAP measures on a diluted weighted average basis we include units in our operating partnerships which is our main operating subsidiary because of their one-to-one convertibility into publicly traded shares. On that basis our fully diluted share account as of the end of fiscal year 2014 was 9,676,755 shares.

This concludes my remarks and our operating performance for the fourth quarter. Thank you for your time this morning and your interest in Farmland Partners. Operator, we would like to begin the question-and-answer session..

[Operator Instructions] The first question comes from Dan Archer with FBR.

Mr.Archer?.

Thanks, good morning, and I appreciate you taking the questions this morning. I was wondering if you can discuss maybe the current pipeline outlook.

I know Paul you mentioned a little bit in terms of farm types you're looking at, between re-size what the pipeline looks like and then also what type of capital capacity or availability you have at the current moment to fund those new acquisitions?.

So we maintain at any point of time a - frankly, very large pipeline way beyond the amount of capital we would actually deploy. We have a pipeline today that has in access of 20 separate transactions in it, spread around the country. There is plenty of deal opportunity in the marketplace, not really a challenge.

For those who are possibly new to this story, there is about $30 billion of farmlands that trades every year in the United States, so no theoretical limit on our ability to find good transactions.

As far as capital availability, we spent a significant portion of the capital we've raised for farms but included in borrowing we have in the neighborhood of $25 million of additional buying capacity that we could use in the coming months. I think that answers all the parts to your question..

Yes, that's perfect. And also the dividend increase, we did that, we saw that come $0.116, and I think you mentioned in your remarks that you expect to cover that based upon the rent in place.

I mean is there some timing there where you think we're covering it, first quarter or second quarter or is it more of covering towards the back half of the year?.

No, it's covered already. And the reason for that is, just think about it and you can do the math, 9.7 million fully diluted shares, $0.464 on an annualized basis and we're collecting, as Lucca said, approximately $9.2 million on the rents we already have, so it's a covered dividend..

Perfect, I know that's helpful..

And our general dividend policy as a company of course is we are small scale as a company but as we rapidly grow into fray, our overheads across a larger base of acres, we expect when appropriate to continue to pass on the scale increases to the shareholders and a value creation through the dividend..

Yes, I know that scalability could be different, very powerful, definitely recognize that.

And then I just wanted to follow-up on some of the comments you made around some pooling of input cost, can you maybe elaborate on what that is? And I apologize I'm not familiar with the concept, so you can maybe just talk about what that is and how it's going to work?.

So we today in our portfolio own approximately 49,000 acres including what we currently hand contract. That 49,000 acres is not by any means all of the acres that our tenants farm because they of course own some land and they possibly rent land from other people.

So we estimate that our tenants probably do collectively have in the neighborhood of maybe 250,000 to upwards of 400,000 total acres farmed by our tenant base today. That group of farmers, and we are working with them to do this, should pool their purchasing efforts in a way to materially drive their input cost down and help their profitability.

Farmers are modest sized family run businesses in general, and they perform their business in what I refer to as the land of giants, John Deere and Monsanto and DuPont and Mosaic and so on.

And that group of farmers needs to have someone like us who has a peculiarly interest due to our leasing of the large volume of acres to get that group of farmers to work together and more effectively use their bulk and size of the scale of total orders to get better pricing.

So we're putting a team of people that can help coordinate that in place, frankly, a small team of people, one or two people. And we think that particularly in the economic conditions the farmers are going to face in the next 12 months, incredibly powerful.

This will start to have a meaningful impact for our tenants in the 2016 year, not the 2015 year, because those - the inputs for 2015 year are basically already in place and behind us. So - if you want more detail on that then I'm happy to talk to you about it later but I think that gives you a flavor of what we're doing..

Yes, that makes a lot of sense and I get to shop there as to how when you say drive increase revenue to the company, I guess the thought there is that - with the health or the cost of the farmer is lower, ultimately in 2016 when we get up some rent renewal, there might be some pricing power on your end.

Is that the right way to think about it?.

No, I mean there is a lot of - it creates a very virtuous circle and cycle for us, think about it this way. So we will do some things that help us recover our direct costs in this effort from the process itself.

But everything we do to make our tenant credit higher is good for our company and good for our rents, and this is going to make those tenants more profitable and so it will flow through in advantages in terms of rent renewals, lease increases and so on.

But equally important, everything we do to help our farmer partners to be more successful allows them to bring us more land deals, to pay slightly higher rents on those land deals, for us to therefore have better cap rates and better dividend capability, and this is incredibly powerful and will be a rapidly growing piece of our story overtime..

Got it, that's super helpful. Thanks so much Paul..

Thanks..

Our next question is from Dave Rodgers from Baird. Mr.

Rodgers?.

Yes, Paul and Lucca, good morning guys.

Paul, can you talk a little bit about the yield on the acquisitions that you saw in the fourth quarter, what the pipeline holds in terms of average yield across that pipeline, and whether you've seen any impact on pricing or going in yields with regards to the changes in crop prices or interest rates?.

So a lot of different questions there but let's start with the first one. We strive and we always have to do a blended average of acquisitions that are 4.75% cap rates or in excess of that.

So in the simplest terms, that's non-achievable in every market around the country, the Corn Belt tends to have lower cap rates and always have historically, other regions have slightly higher but the blend of what we do should be 4.75% or better and has consistently been able to stay at that level.

We've seen recently there are some outliers that are even higher than I am about to say but in general about five in a quarter is the upper end of our cap rates.

And we are incredibly radisson to do anything below about 4.4%, 4.3% cap rate just because in this blending concept if you let yourself slide too low it's hard to blend back up to that 4.75% target. So that I think gives you some insight there.

In terms of the general pressures and what we're seeing in the farm economy, we're not seeing in acquisitions by any means, we're not really seeing material difficulty in achieving the cap rates we would expect, in fact if you would see land prices decline a little bit, they have a tendency to decline slightly more rapidly than rents, rents are actually stickier.

So it's probably modestly in our advantage the little bit of pain that's in the farm economy today in terms of maintaining cap rates. As far as rental renewals and the like - we're having the same execution success we would have expected in terms of getting all the farms leased and that's not really a problem..

Okay.

And I guess excluding any of the recent acquisitions but as you think about your lease rollover this year I want to fancy it's 3,000 to 5,000 acres or something in that rough math, but can you tell us what the exposure is for roll over this year and what's the change in negotiated rates is on the leases that did come up for renegotiation in early 2015?.

First, most of the rollover of leases that we had this year are with the farms that I historically owned and operated before the IPO, so we had a very positive rollover experience through that process because obviously we're - I have significant influence on that tenant choice [ph].

So we had a good and positive result and in fact our rental increased. We do - the next year in fact most of the rental increases will also be on farms that were in that original portfolio that I had historically owned and operated prior to the IPO.

So the first time we will see a significant number of rental renewals from the acquisitions we've done since the IPO would be leases that expire late in 2016, that would be the first time we start to really be exposed to rental rollover.

And given the speed at which we're growing this portfolio when that happens it will probably be something under 20% of the portfolio, even at that point in time..

Okay, that's helpful..

The real answer is….

In Nebraska off late [ph], any potential challenges there or issues with that or is that a state that you feel you can continue to growing?.

Yes, we can continue to grow there. I mean if you pull apart the amount of capital deployed you will see that we are deploying slightly less capital in the heart of the Corn Belt then we're deploying in other regions.

We're doing that for two reasons, one is that this portfolio because of where it started was originally over waited to the Corn Belt so we didn't need to grow assets from a diversification perspective in that region very rapidly.

And the second reason is that we think the cap rates spreads between a place like Illinois and a place like the Carolinas or the Delta are out of lack from a historical perspective and that there is frankly better value in some of those less popular regions than there is in the heart of the Corn Belt.

That being said, the Corn Belt is - as I always call it the Park Avenue of Farmland for a reason, so we want to continue to deploy capital there and not get behind the curve but we've made a slight tilt if you will to places where we think there is better value at this point in time..

Alright, great, thanks for the color..

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Pittman for any closing remarks. Mr.

Pittman?.

Thank you. And we appreciate your interest in our company. We look forward to updating you on our activities and results in the coming quarters. Thank you all..