Good day, and welcome to the Farmland Partners Inc., Q4 Earnings Conference Call and Webcast. 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 that this event is being recorded. I would now like to turn the conference over to Mr. Paul Pittman, Chairman and CEO. Please go ahead.

Thank you very much, Daniel. Good morning, and welcome to Farmland Partners' fourth quarter and full year 2016 earnings conference call and webcast. We truly appreciate you taking the time to join us for these calls. 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 the public filings and press releases. Please refer to the Investor Relations section on our website at farmlandpartners.com for our fourth quarter and fiscal year 2016 earnings call supplement presentation, which I will be speaking to later in this call. Again, I want to reemphasize the fact we will use some supplemental slides, so please find them on our website at farmlandpartners.com. The link for the presentations directly below the webcast link, and is also posted under our Investor Presentation section of the website. With me this morning is Luca Fabbri, the Company's CFO, and I will now turn it 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 9, 2017. The phone numbers to access the replay 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 23, 2017 and have not been updated subsequent to the initial earnings call. During this call we will make forward-looking statements, including statements related to the future performance of our portfolio, our identified acquisition and farm properties under evaluation, impact of acquisitions and financing activities as well as comments on our outlook for our business rents in the broader agricultural markets. We also will discuss certain non-GAAP financial measures including FFO, 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 and is furnished as an exhibit to our current report on Form 8-K, dated February 22, 2017. Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations and we advise listeners to review the risk factors discussed in our press release yesterday after market close and in documents we have filed with or furnished to the SEC. I would now like to turn the call back to our Chairman and CEO Paul Pittman. Paul.

Thank you, Luca. So this is probably the most important conference call that we've done since the Company went public back in April of 2014. We set out at that time, with the goal of buying incredibly good quality farms and renting them to good tenants and through that creating a REIT that had meaningful scale, meaningful diversity and strong profits and the ability to distribute those products. It appears to us that the market fundamentally does not recognize the success that we have had. We now have a portfolio that is 148,000 acres across 17 states with a 100 plus tenants and 26 major crop types. In the last few weeks, we have made three very significant announcements in the market and to be blunt the stock price has gone down, it makes utterly no sense. We've had an outstanding quarter and an outstanding year, significant increases in revenues and AFFO and any other financial metric you choose to measure us by. And it appears the market is not understanding the story. So we really want to focus on the specifics of some of these events and what has happened. So what I'm going to cover today is Luca will address some of the key financials specifically, I want to address the scale and the profitability of the Company. The diversity of our portfolio, which means the stability of the earnings that we'll have going forward, the discipline deal structure that we put in place when we do major acquisitions and the benefits of that sort of deal structure showed up this quarter in terms of the lease termination payments, which will directly address, I want to reemphasize that we are fundamentally in the farmland ownership business not the farming business. We do not take direct commodity price risk…

Thank you, Paul. So 2016 has been a great year for FPI, and the fourth quarter of 2016 specifically has been a great quarter leading to somewhat sizeable positive surprise for the street, so I'd like to address our fourth quarter performance first. First and foremost, I would like to remind you that we live in the world of agriculture, and while agriculture itself is of course an incredibly seasonal business throughout the year. The annual cycle, and while we are not an operating kind of agricultural Company, we still have a little bit of that seasonality embedded in our performance, and especially as far as raw crops are concerned the fourth quarter is where the bulk of the revenues for farm operators comes in and that's where the vast majority of the crop share rent payments that we received come in. So fourth quarter tends to be always best, because of that seasonality for us, also in a Company that is growing at the pace we are growing, without any dispositions of assets of course, our asset base continues to grow through the year, and therefore later in the year quarter's benefit from a larger asset base, and therefore revenue base is compared to earlier quarters of the year. Specifically during the fourth quarter besides those crop share revenues that larger asset base, we had a specific event, which is the termination of a couple of lease agreements that led to a couple of different positive events for the Company, one was the payment of about $2.8 million in termination fees, and I'll turn back to that in a second, but also we had the acceleration of revenue recognition for $3.7 million, just to give a frame of reference. The vast majority of those $3.7 million have been paid…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Jessica Levi-Ribner with FBR. Please go ahead.

Good morning. Thanks so much for taking my questions this morning. What is the renewal rate, and then also overall cap rate on the portfolio pro forma for the merger now?

Pro forma, this is Paul. So I'll take that one, so in terms of renewal rate we expect 100% occupancy on our properties, I don't have a number exactly at hand, Luca, if you know you can give it, but we probably have 90% or more already released for the 2017 year, obviously, we're still in the winter time in the northern part of the country. So a 100% occupancy is the expectation on the portfolio. In terms of cap rate, cap rate of the properties we acquired in AFCO, especially crops in particular, but the entire blended portfolio is approaching a total of a 6 cap, when we get it fully stabilized, it's right now in more the mid-fives and the difference there is that we paid for three or four separate properties that are still in development. So in other words not fully revenue-producing yet. So we've got a modest a couple of million dollars of continued investment before those and another passage of 12 months to 18 months before those are fully stabilize as revenue producers. But we'll see an overall cap rate, that pulse portfolio-wide cap rate frankly into the mid, mid-to-high 4% range and we think that will gradually get higher over time as we continue to acquire specialty crops. And we're seeing a modest increase in cap rate in the row crop side of the portfolio as well as valuations have come down somewhat on some of that, those sorts of properties we're acquiring and we're able to extract reasonably good rent negotiations.

And how have just piggybacking off that how have rent negotiations has been in the past I would say couple of months, is it pretty stable from last year or?

It's actually, it's actually interesting. We've probably seen a portfolio-wide same-store sales basis and this will surprise a lot of people, but about 1.5% to 2% increase across the board in rents. Now that doesn't come by increasing every single contract by 1.5% to 2%. What's happening is there are a few regions of the country and particularly as we look at our portfolio specifically, if we're renegotiating a rent that was negotiated in 2014 not 2013, because remember, we were a carryover business that I had owned before we went public, those rents are generally coming down. I mean they were negotiated at the absolute high in the row crop world particularly in the Illinois and Eastern Nebraska and places like that. And you're seeing them come down, but not massively. I mean there are, everyone's different, but they're often in the 5-ish% kind of range. But the row crop areas, other than the core of the Midwest are still getting modest rent increases and specialty crop regions can get even very significant rent increases. And then as I've emphasized in the past, we tend to make improvements on every property we would buy. So with the addition of drainage, with the addition of grain storage, with the addition of irrigation to these properties we generally will get something like 10 cap on the incremental, additional investment and that blended into the overall rent is pulling our same-store sales, as I said, companywide up a little bit. I mean we're pretty proud of that fact and what's for the row crop side of the of the farm economy relatively difficult but we're still gradually raising rents portfolio-wide.

And then just one last one heading into 2017 I guess we're already into 2017 what's the acquisition outlook, I know you touched on a little bit in the call that do you expect a good amount of farms to come online or has the pace of kind of available properties slowed.

I mean there is $30 billion of farmland transactions available in the United States every year. So I mean we about 2% of farmland turns over, it's really a small percentage of the total industry, it's not, but since the industry is so large, there's a huge, huge opportunity set out there. Our pipeline today is probably of deals that we know than are seriously interested in it's frankly, probably over $1 billion we could easily do that amount of acquisitions. The challenge in this company and this [wonder] should record it we're not going to sell equity at the prices we're trading at to buy anymore farms. I'm not going to bill it. I own a lot of the company myself, I'm not going to do dilutive acquisitions we have a $1 billion of farmland and we've got a really good operating model right now if we have to sit here at the same size for a while we will or we'll do operating partnership unit transactions where we often negotiate a premium to current market price in those negotiations. We get farmers to believe that our farms really are worth $12.25 a share and use that kind of price in those negotiations will continue to do deals, sort of just give us what the key takeaway is fundamentally, very little limitation on our ability to find good transactions, its ability to find a fair price for our equity security. That's limiting the growth of the company, and we're not going to -- we're going to be very disciplined, we had to grow the company, we did grow the company to something that's really a meaningful scale now. But we're not going to do super dilutive equity offerings to continue to grow, we're going to wait till the market realizes how good this company actually is.

[Operator Instructions] Our next question comes from Mitch Fitter with Aegis Capital. Please go ahead.

Hey guys Paul and Luca. Let me try and simplify the question a little bit, and maybe we can figure out why the price of the stock is not performing that well. Are you having any kind of flooding issues on the properties that you bought in California and do our labor issues is that can be a concern to you?

Yeah. So let's take them one at a time. So on the flooding issue, no, we are not, we have one -- the big flood -- the big dam risk, which I think is a lesson now was that overall build dam in the north of Sacramento always, we are downstream, so to speak from that dam and not even directly in the flood zone below, but literally hundred miles or more, some, we had one property where, you might have some theoretical risk if that damn broken and raise the level of a bunch of other rivers along the way, but other than that property, no exposure really at all. Obviously, we'll see what happens is a key terrain. So we really don't have any kind of flooding thing on any of those properties, they were properly located, properly cited properties in the first place, and so we're in good shape there. On the employment front, which is obviously a good question, all of the specialty crop where there is quite a bit of hand labor has some level of concern with regard to a crackdown or undocumented workers, generally speaking though there is appropriate Visa program for that migrant labor that does a lot of that picking, most of our tenants would use a contractor who provides that labor. They are here with appropriate legal status generally speaking, that's been pretty regulated for a long period of time. The big -- literally you think of it is several bus loads worth of usually Hispanic workers. That's have been a regulated piece of industry for quite a bit of time, it's not -- it's just not something people are super fearful about, what will happen over the long-term is that you're going to see frankly more mechanization in most of those crops in terms of the picking of the crops in particular, as people continue to have a general fear of the migrant labor issues, but that, I guess that for most of our tenants that -- they're not sort of picking up a group of guys at the edge of the Home Depot parking lot for example, they're working through some major contractor and they're properly documented because of that.

Okay. Just as far as the dividend that you're going to be paying, this is my last question, the share count has gone up considerably if I remember correctly, American Farmland did not pay higher dividend as you guys did. And you probably stated this already, but you would have no problem covering that $0.51 going forward.

No, absolutely not. We have, we put out an agenda if you went to our website, you can see this presentation in the public domain and it may still be a recorded conference call about a week-and-a-half ago to try to inform everyone about the effects of the AFCO merger on our profitability. We did a separate conference call and presentation and the punch line of that presentation is that, had we had the companies combined during 2016. We would have had something in the neighborhood of $0.62 I think is what it was of AFFO per share, we had the company's combined and operated them at our cost structure. So we feel pretty comfortable that going forward this is, those, that transaction is very accretive to us that $0.62 of share by the way was before the termination of the Prudential contract so it's frankly better now because we assume the Prudential contract in an analysis as we hadn't gotten out of it yet. So this, we're in we think we're in great shape. The key you're right Mitch, they did have a lower dividend than us but the key is that we'd largely wiped out the cost structure of American Farmland. So we picked up $15 million, $16 million, $17 million of revenues something like that on our Company and we've really only brought over one employee and now with the termination of the Pru contract basically got out of all the costs of that company and got a big incremental revenue bump, so very powerful for us in terms of AFFO per share and covering the dividend.

It appears that at this time we have no further questions. And with that, I would like to turn the call to Mr Paul Pittman for any closing remarks.

Great, thank you, Daniel. And thank you all for joining our conference call. We do appreciate the opportunity to update you. For those of you who have been an investors with us ever since the IPO thank you for the long-term support, we do believe we are truly doing what we originally set out to do and has begun to see that profitability come through the bottom line for the company and give us a well-covered dividend, frankly. We certainly hope that the stock price begins to reflect it, but in that regard thank you all for the support you've given us through the last couple of years and we'll continue to grow the company and make it even more successful in the years ahead. Thank you, operator.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.