Farmland Partners Inc. (FPI) Q2 2021 Earnings Report, Transcript and Summary

Good day everyone, and welcome to the Farmland Partners, Inc. Second Quarter 2021 Earnings Conference Call. All participants will be in a 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 Paul Pittman, Chairman and Chief Executive Officer. Please go ahead.

Thank you. Good morning and welcome to Farmland Partners second quarter 2021 earnings conference call and webcast. We appreciate your taking the time to join us for these calls, a very important opportunity to share with you our thinking and strategy in a less formal format than public filings and press releases. With me today is Luca Fabbri, the company’s Chief Financial Officer. I will now turn it over to Luca for some customary preliminary remarks.

Thank you, Paul. Thanks to everybody who's on this call live this morning or is listening to this call -- this calls recording. The second quarter earnings press release went out yesterday afternoon. This call is being recorded and a replay will be available shortly after the end through August 15, 2021. The phone numbers to access the replay are provided in your earnings press release. For those of you who are listening to the rebroadcast of this presentation, please remember that the remarks made herein as of today, August 5, 2021, and have not been updated subsequent to this initial earnings call. In this call, we will make certain forward-looking statements, including statements related to the future performance of our portfolio, our identified and potential acquisitions and dispositions, the impact of acquisitions, dispositions and financing activities, business development opportunities and we will also make some comments on our outlook for our business, rents and the broader agricultural markets We also will discuss certain non-GAAP financial measures, including net operating income, FFO, adjusted FFO, EBITDAre and adjusted EBITDAre. 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 second quarter 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 August 4, 2021. 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 very much, Luca. So where we sit today as a company has me more optimistic than I have been since our IPO seven years ago. This was a solid quarter, but for the litigation expense. I'll turn to the company specific items in just a moment. But a few comments about the general market trends in our industry. Farmer profitability is up materially. It is probably back to the levels we experienced in 2012 and 2013 era. This has been a dramatic and rapid recovery of farmer profitability since last fall. The big driver there of course is grain prices. But importantly, this is a demand driven bull market. And one characteristics of demand driven bull markets is they usually last for a reasonably long time at least several years, as opposed to a supply shortage bull market, which can end almost overnight when supply recovers in the ag markets, but this demand driven bull market is likely to be with us for quite some time. What that means in terms of the operating business itself is that our rent renewals that we are doing right now, and this is really the first time we've been renewing leases in a strong farm economy, because the turnaround occurred after we put most of the 2021 leases in place. But as we're renewing 2022 leases, we're getting increases in low crop rents that are at least in the 7% to 10% range and some as high as 20% or more. Land prices are also up quite dramatically. We have been turning down offers for some of our properties that are materially above what we have paid. As many of you know, over the last several years, even in a down market, we sold quite a few properties at something in the neighborhood of 15% or 20% premium to our purchase price. We strongly believe that the assets we own are rapidly appreciating and will continue to do so for quite some time. I think the land value appreciation trend should last for several years, it's hard to predict out beyond two or three years. But I think we will have that land appreciation trend with us for quite some time. We have talked in the past that our NAV was in the $14 range. I don't want to get too specific here because as many of you may know, the USDA land value survey comes out tomorrow. And we will do some updating of NAV when that occurs. But we assume that we are appreciating substantially above the $14 NAV and going to continue to go higher. In a sort of non-ag related issue that is very powerful for farmland values, of course is inflation. There's some different points of view here. But certainly, mine is that inflation is with us likely to be here with us for quite some time, you can certainly see it in the pricing of almost all goods that is obviously very good for farmland. Turning specifically that operational and financial performance. As I alluded to a few minutes ago and there really is a lag of almost a year between the time the farm economy turns and we start to really see it in our profit and loss statement. And the reason for that, of course, is that we rollover, our leases and we roll over about one-third of them every year. So when we rolled the leases for the 2021 year, late last summer and during the fall, in most cases, we weren't in a strong ag economy yet. As we have gotten to this summer, we are at -- we're rolling those leases over in a very powerful economy and having very strong success with lease renewals. We're back the buying farms. As you've seen in some press releases, we've bought quite a few farms and we will continue to do that. We're finding from time to time, some relative bargains even though, it's an appreciating market, and we will continue to grow the company. As you probably noticed in a press release a few days ago, we have reopened and restarted our loan program. This has always been a good program and meets the needs of the farmers. We are at putting loans out. Those loans are usually done in the neighborhood of an 8% interest rate or 8% return to the company, we will intend to continue to expand that business. That loan program is fundamentally based on asset values as opposed to cash flows of the farmers. What we're doing is giving them a chance to access the pent-up equity that they have in land. We generally will only make a loan on a farm, we would be happy to own and if the farmer would happen to default on the loan. We would continue to own that property. Our off balance sheet asset management business has continued to grow with the opportunity zone fund and we intend to help that organization continue to grow that business, which obviously increases our management fees, but also increases the total number of acres we own or manage. We are also exploring some other off balance sheet, asset management businesses, to increase the scale of the company and to give us multiple ways to grow, even if we are not happy with the equity price at a given point in time. Few comments about the litigation and another big event in this last quarter was that Quinton Mathews also goes by the name of Rota Fortuna, admitted that he essentially made up the entire article and that his article was part of an orchestrated shortened distort attack, funded by a hedge fund. It’s a very powerful admission that he made, it went so far that he has been banned, as we understand it by Seeking Alpha, from further publishing of any sales sort, since he intentionally, seems to have intentionally misled the market and caused a great deal of damage to the company and to our investors. We believe that that is a major step in the repair of the company and management's reputation. We also believe that it makes it clear that the class action is frivolous. It does still continue against us, believe it or not, hard to imagine with that admission on the part of Rota Fortuna why the plaintiffs and their counsel in the class action think they still should have claims against the company. But they are at this point, at least still pursuing that. We do hope they will drop those cases. Some of the derivative cases have been voluntarily dismissed since that occurred. We think that the admission of Rota Fortuna substantially increase the probability that we get a recovery from Sabrepoint, the hedge fund that was involved with all of this. We think that the elevated legal spend we've seen in the last quarter or two should taper off at least for a while. As some of these cases appear to either be going away, or lessening, at least in the amount of time that we spend on them. With that, I'm going to turn it back over to Luca, to go through some of the key financial highlights for the quarter. Luca?

Thank you, Paul. I will not kind of read out to you, all the financial metrics that are contained in the earnings release that went out last night. There is however, one measure that I want to draw your attention to that I think is the most meaningful. If you look at the -- our financial performance, year-to-date in terms of AFFO. And you've probably seen in our earnings release that we are showing it both AFFO as usually calculated. And we also further adjusted it to take out the effect of the various kind of legally -- the kind of legal items in progress in terms of litigation. And we believe that these lots are going to really reflect our true core business. Year-to-date, we are showing an AFFO of negative $0.02, versus negative $0.03 for the same period last year. Now in this console, it's an improvement. In this context, I just want to remind you also, that we have – we are subject to a very kind of high degree of seasonality in our earnings, because while our cost structure is by and large, majority constant through the year evenly spread through the four quarters of the year. Our revenues tend to be very concentrated in the fourth quarter because of certain lease participating lease structures. So just quick reminder of that, especially for newer shareholders that joined the company here recently. Also wanted to mention our acquisition disposition activity. Year-to-date, we have completed four acquisitions for almost $30 million. We've also sold 15 properties for a total consideration of $31 million in a gain of 3.5 million. Now the majority of these asset dispositions were made to the OZ Funds. So we are effectively retaining this asset base as kind of – for revenue generation purposes through management fees. In the Q, we incurred the new debt in the form of a short-term bridge loan of $40 million. The interest expense actually for the loan was almost 50% paid by the seller of the property underlying this transaction. Year-to-date, however, our indebtedness total indebtedness is down $6 million not very much, but certainly in line with our intent of gradually reducing the leverage in the company. Also in – we are seeing a very strong cash position right now, as of the end of the second quarter. We have about $40 million of liquidity available to us for acquisitions and other purposes. Also, we have engaged in quite a bit of activity of equity issuance activity through our aftermarket program. Specifically, we should about 2 million shares at an average price of about $13.11, generating net proceeds of a little over $25 million. As we see today, the fully diluted share count of the company is 34,335,000 shares. This concludes my remarks. Thank you for your time this morning and your interest in Farmland Partners. Cole, we would like to begin the question-and-answer session.

Thank you. And we will now begin the question-and-answer session. [Operator Instructions] And our first question today will come from Dave Rodgers with Baird. Please go ahead.

Hi, Paul. Hi, Luca. Thanks for all the details in your prepared comments. Paul, I wanted to go back to the leasing spreads. It's, obviously, the first time I think since you've come public, we've seen these strong leasing spreads. So it's a great thing to see. I wondered if you could give us a little more detail on the 7% to 10% increase that you talked about maybe the percentage of acreage or the percentage of the portfolio in total, that you achieve that on maybe some regional color, and then any thoughts around where permanent crops come in. And if there's a base reset, you'd expect to see at any point in the near-term?

Yeah, so the 7% to 10% is what we currently would expect portfolio wide on renewals, we think it may be a little bit of a conservative number. But it's based on the amount, it's kind of a conservative comparison of the relatively small percentage we've already done, I mean, we probably have the releasing process, we're 25% of our way through it in the sense of at least a handshake or a signed lease. Those numbers are coming in at that 7% to 10% range or above in many cases. So I'm comfortable saying that I think we'll get through the whole process at 7% to 10% or better. But a couple things break our way, we may come out of this at a plus 10%, across the board, we have some large leases where we're trying for 20% increases. And if that happens, it pulls the whole average up pretty substantially. So look, this is a -- last quarter if you recall, I worked through some numbers about how the improved grain prices change profitability per acre and revenue per acre, if you remember that. So think about it this way. If revenue per acre for that farmer is going up by 20%, 25%, we frankly think rents ought to be going up almost that much, maybe not all of it, the biggest beneficiary of higher grain prices should be the farmer themselves. But the second biggest beneficiary ought to actually be the landlord in our view. And so we're working pretty hard to push it. In terms of region, strongest increases in the Midwest, as you all probably recall, like 400 million of our portfolios in the state of Illinois alone, that'd be 35%, 40% of the whole portfolio is there. And those are the places where we're getting increases there are quite strong, really running 10% or better, and the Illinois renewal so far, the rest of the other grain producing regions, high plains, delta and southeast, a little below that, more like maybe call it 7% or 8%, 9%. But, we think some of those will come around and be stronger as time goes by. But as is typical, the Midwest responds most rapidly to changes in crop price, in terms of the rental market. Important to note, and I know, you know this day, but better than your question, we should see a significant increase in rents, in each of the next three years, because we rollover as I said roughly told portfolio overtime.

I appreciate that color, Paul. And I guess maybe a follow-up question, with regard to the acquisitions and the pipeline. Can you talk about what the acquisition pipeline looks today? I mean, now that you're kind of back in the acquisition market, give us a sense for what you've been underwriting? And where the yields are coming out today, if you're seeing this appreciation and land, combined with the productivity, our cap rates changing much, and what are your investment cap rates today?

Yeah. There -- so the deals we've done recently here have had we announced a really large transaction in Louisiana, a month ago or so. That transaction came in and kind of a low to middle-fours. In terms of current yield, the cap rate on the property, we announced a couple of smaller transactions. And we've done another small one recently those are coming in around five. We're actually very happy with those sorts of numbers. I think, we haven't added a lot of property in the core of the Midwest, because we're so heavily weighted there already. Although, we will continue to add those, I think realistically, those are going to be in the low-threes. But we intend to continue to grow this portfolio, kind of maintaining the cap rate against asset value that we have today, its not gradually improving. It's really just a balance of how rapidly we want to grow. If you drop, your cap rate expectation by 10 basis points or 15 basis points, which actually it's quite a bit when you think about it. But if you drop it, that amount, you'll win almost every deal. But we're, -- we don't have unlimited cash and we're trying to do the best deals, not all the deals. And so right now, I'm pretty happy with cap rates. But I think you should expect them to get done in the row crop area, between a low of three and a high of five or just over five. And it's very regional regionally dependent, where those cap rates come out.

And then Sorry, just the early part of the question, just the pipeline overall, do you have a pipeline number or something that you're that…

Yeah. We do have a pipeline. We've got quite a few deals. We got a few under contract are right now. And we've got quite a few, we're looking at. Certainly, measured in the kind of 50 million plus and pipeline, not to say that all those deals get done, but we have enough to keep us busy for the next couple of months for sure.

All right. Thank you, Paul.

And our next question will come from Rob Stevenson with Janney. Please go ahead.

Good afternoon, guys. Just to piggyback on Dave's question. So in terms of crops, and locations, you're targeting here going forward, any differences to the historical mix of what you've done in the past? Or is it more of the same, because anything looking particularly more attractive to you these days or less attractive?

So, let me start with a general, and then go to the specific. So the general posture and policy of the company is that, we want to have a broad diversified portfolio that reflects food output on a nationwide basis. What that has historically meant, and still does is something like 70/30, row crop specialty. And we will, in relatively broad strokes stay close to that, meaning, kind of think of it as 60/40 to 75/25 kind of bracket is where we want to stay. As far as specific regions, though, in a tactical sense. We find as I said, rent increases come more quickly in the Midwest and so does appreciation. So, we are actively and aggressively pursuing opportunities in the Southeast, the High Plains and the Delta right now. The biggest deal we've done recently was in fact in the Delta and Louisiana because you get sort of a brief window, where you know, the appreciation is coming because you're seeing it already in the Midwest, but it just hasn't quite shown up in the value expectations of sellers in some of the other regions away from the Midwest. And that's -- and that we're just sort of trying to take advantage of that right now. So I'd say we're a little more focused on the Southeast and the Delta than the Midwest. But, the Midwest is such an important growing region, we'll continue to grow the portfolio there as well, just probably not quite as rapidly as we will in the Delta and the Southeast.

Okay. And then Paul, how should we be thinking about acquisitions over the next couple of quarters on -- on FPIs balance sheet versus doing deals for the managed portfolio?

Yeah, so I think you should think most of them will be done in the FBI portfolio. We -- unless it's in an opportunity zone, we will do it at FBI and even some of the deals in opportunity zones will end up taking because I think we have slightly higher access to capital than the opportunity zone fund does. But, where we are -- and we think our shareholders should be largely indifferent. If we do in the opportunity zone, we get a nice fee income, the phrase are overheads and we don't have to commit additional capital. And if we do it in the public company owned portfolio, as I call it then we get the long term appreciation, we do have to finance the asset, but we also get the current yield. So we think it's a win-win for shareholders to just fundamentally growth scale. And we love the idea of having ways to grow this business without necessarily having to issue equity or raise debt on the -- directly on the balance sheet of the public company, that's good for shareholders, obviously, we're going down a path that many other REITs have gone down in other sectors. And it's worked pretty well to be able to have multiple sleeves of capital to grow your portfolio at all points in time and that’s the path we're trying to follow.

Okay, that's helpful. And then, earlier in the call, Paul, you said that you're expecting the litigation cost moderate for some period of time. Given how impactful every sort of $0.5 million dollars is still to earnings? What type of magnitude should we be expecting in terms of the tapering off of the litigation costs in the back half of the year? You guys have been doing sort of call it $2.5 a quarter year to date? I mean, is it half that? Is it a quarter of that? Rough numbers? I mean, where should we be thinking -- how should we be thinking about that?

Yeah, -- I'm going to have sort of guess, because I'm a very direct person as you know, Rob, but I will certainly be wrong, but I'll give you my honest opinion. I think it'll be in the neighbourhood of half or a little more than that that we still incur. So think of it as 50% to 60% of what we've seen in the last couple of quarters. If you look at the posture of the two cases, one of the case against Rota Fortunae and the Hedge Fund, kind of two separate entities that we're going after there. The Rota guy, Quinton Mathews has given up and accepted and admitted that he did --fundamentally did something improper. And paid us a bunch of money and he will continue to pass. So, that wouldn't have spent any money there anymore. The business decision on the case against Sabrepoint, which is in Texas courts, in the federal system, but in Texas. We're going to have to make a financial decision there on whether we think we're going to recover more than a cost to continue to sue it. Right now, we think we can. And so for now, we're still going after that case. It's a pretty slow moving position right now. The Class Action cases, which are really find just so frustrating. It's hard to believe, but I find that more frustrating than the cases that we had against the perpetrators of the Short and Distort. Those cases in our opinion are driven by lawyers. I mean, no one after what Rota Fortunae admitted, can believe that there is a legitimate case to pursue against the company management. I mean, it's just beyond the pay all. It's so frivolous. So unfair to our existing shareholders in the company that we still have to litigate that. But the court system is unfortunately, incredibly tilted against companies and shareholders and in favor of Class Action lawyers. So it is what it is, and we're going to continue to fight it. But some of the credit of a couple of the -- what they called, the derivative cases, as folks stepped up and said, we're voluntarily dismissing because given what Rota has admitted it's not that make any sense to pursue it. Hopefully, that will happen in the Class Actions. Again, that case is in a bit of a slow moving point of view. The discovery in that case is closed. And discovery was, of course, one of the biggest pieces of the cost structure in that case.

Okay. Are there any important dates that we should be aware of regards to either of those outstanding litigations are made around 2021, or they likely to be a stretch to get a 2022 at this point?

Well, I think the Class Action is likely to get -- it's probably a late a fourth quarter resolution in the Class Action cases is my would be my point of view. That's kind of a next big, not that, oh, get the trial by then. But that's the next big chance to see that case disposed of in its entirety, I think. And as far as the case against the Hedge Fund, that -- if we continue to move forward on that, which at least now, I think we will, like I said, it's really just a business judgment about whether we recover more than we cost to get it. That case will drag into 2022 year, unfortunately.

Okay.

But, we’ll let steady. We will be doing -- the one that I can't just stop doing is a Class Action case. I mean, they make stuff up and we have to respond. It's like the water torture. It's unbelievable.

All right. And then last one for me. Luca, where -- from a debt cost standpoint today, where are you finding the best capital? And what is that being priced out for you these days?

Right now the average cost of the debt across the entire loan portfolio that we have is just shy of 3%. We are looking -- this -- some of the repricing going forward, it's a little bit on there is some uncertainty, mostly because of what's going on with LIBOR. So, there is still -- we're still going through a process of figuring out what's the right benchmark -- the -- knowing that the future -- replacement of LIBOR is not quite ready for primetime yet. And we find that the prime rate is not a good kind of benchmark. So, it's a little bit uncertain how that will kind of play out here in the future, but we are in active conversations with our with lenders, existing or new. So, I should be able to give some more kind of meaningful update, maybe next quarter.

Okay. Thanks guys. Appreciate the time.

[Operator Instructions] Our next question will come from Craig Kucera with B. Riley Securities. Please go ahead.

Hey, guys. We saw a sequential pick up in the cost of goods sold line item, I believe that's affiliated with your development properties. Can you comment on what you're budgeting for 2021 in that regard for replanting trees and vines and things of that nature?

Yeah, Luca, I'm going to turn this to you, if you know the answer. That line, I don't think reflects vines that -- and trees, it reflects the input costs accumulated over time as it relates to the farms we direct operate. When we direct operate, it is usually a farm that is in some sort of redevelopment process. But it won't be -- you would end up capitalizing the tree and the vine costs. This is the actual operating costs of those farms and then offset by the revenues. Luca, I don't know if you can take it to the specifics that Craig asked for I certainly can't.

Yeah, no, I also don't have the figure at my fingertips that you're asking for Craig. However, the variation in that number from year-to-year is not so much related to the -- to kind of input costs, but to the number of properties and to which properties we are directly operating in each given crop year. So, the -- on the other side, on the revenue side, there is somebody variability also within the same farm. And just as a reminder, we usually direct operate on a very opportunistic basis, kind of, depending on specific circumstances with tenants and with the crops and development status and so on and so forth. So, hope that helps. But unfortunately, I don't have the specific number ready for you.

That's fine. I can circle back offline. And I guess my second question relates to the decision to reopen farm lending, is that really tied to kind of getting close to winding down litigation and feeling like a lot of those allegations are behind you? Or are you actually seeing increased demand for those types of loans that you want to take advantage of?

We had incredible demand for that program all the way through the last three years. And we lost an immense amount of revenue by not keeping that program open. But we thought that since it was the core of the accusations against the company, that it was just sort of imprudent to keep making loans. Plus, we were we were taking our capital and buying our own stock back at, something like $0.50 on the dollar, in our opinion. And so it just didn't seem like a very good place to deploy capital, with those two, issues overhanging. As we saw the stock price recover, and then, had the -- one of the major, sort of, perpetrators of the short distort attack admit that, is false, the -- this article is largely false. We felt like it was great to get back in that business. You know, what we liked about that business is that it addresses one of the challenges of our asset class, this is a relatively low current yield asset class. It has a wonderful, long-term hold appreciation, low risk asset class, but look, investors want some yield as well. And so the long program really helps us in our view there because it gives us a reasonably strong current yield. And still exposure to farmland with a relatively low risk profile associated with that. And then, on the off chance that elite alone doesn't get repaid. We're happy to own those assets. But so we're, kind of, thrilled to be back in the business, just felt like all the stock price was sort of depressed, and that was in the litigation was as heated as it was for a while, but it was hard to be to keep doing those loans.

Okay.

And our next question will come from Buck Horne with Raymond James. Please go ahead.

Hi. Thanks for the time. I'm just curious if you could just walk us through, how drought conditions are playing out across your markets and farms over the course of the summer here if there's any issues with water shortages in your neck of the woods, and just kind of any thoughts on potential impact for specialty crop performance later this year?

Yes so wasn't well divided into specialty crop and California in particular. And then the row crop regions. The row crop regions where we own farmland have largely been actually pretty rainy and wet this year. The drought -- the severe drought you read about in the row crop production regions actually starts clearing the Pacific Northwest where we in agriculture called a P&W and so it runs from, kind of, Washington and Oregon all the way across Montana, the Dakotas, into Minnesota. We have one farm in South Dakota it's kind of right on the edge of it been affected to some degree what small little crop farm, but they've gotten a few rains. I think it'll be not a great year but an okay year and away from those areas. You know, Eastern Colorado what happens because it has to do with where the Jetstream sitting is if you get the Northern Rockies as dry as they are you tend to get the central and southern Rockies and the plains east of them wetter. Eastern Colorado is had ones and Western Kansas had one of the wetter years that it's had in quite some time. So you're -- we're pretty much okay. It's is the answer on the row crop side. On specialty crops in California, very difficult water environment in California. We've got enough water to finish out all the crops on our farms this year, but the price of that water has gone up. So as a line item and your cost structure, the tenant, and it is it real and as that relates to our crop share profit, probably going to be hurt a little bit by that increased cost. But on balance, this will be -- in our view, will be a better year for specialty crops than last year. Now, granted, that's off a pretty low base. But even with the water problems, it should be better than last year. Because the markets are back open. If you recall and listen to conference calls for months, I mean, for multiple quarters with us, our lemon crop basically was unsold last year. And that sort of thing isn't happening this year with the reopening from COVID. So all-in-all, water has gotten more expensive. We have, for this season, enough to get the crops done. And the overall year will be better in 2021 than 2020.

All right. Sounds good. Thanks for that update. It's a lot of color. Thank you. And my follow up is just kind of more of a strategic question. Just thinking through, utilizing the ATM and certainly having some low cost equity, but still, you raised, well below your -- when you believe NAV and of course, you believe NAV is, of course, rising here. Just walk us through the rationalization of that trade off of issuing equity below NAV in terms of the impact for shareholders, and if that trade off continues to make sense now that the stock is maybe closer to $12.13 here?

Well, as you know -- as you noticed, we issued the stock at a price -- average price at $13.11. So we sort of agree with you as -- on the on the question of, as it gets close to $12. Probably, don't want to be issuing a lot of ATM stock, particularly, when the NAV is higher. Obviously, every time we go to issue equity of any nature, our first consideration is, how does it compare to the -- is it a creative in a balance sheet sense? And then, the second question is, is it a creative in a income statement sense? And we have to manage back and forth between those two things. At sort of $13-plus, our view was, look, we can do things with that money, that increase the cash flow of the company, defray the overheads of the team across the bigger asset base in a way that on balance is a positive for investors. If we're -- and as the price goes lower, that justification gets harder and harder to make. I don't exactly know where that line is, except to tell you that, certainly, when the stock was down at $7 or $8, our view was, we're not going to sell any of it. And the stock was $20, we tried to sell a lot of it. And everything in between, we got to just kind of manage back and forth, balancing both the balance sheet considerations in terms of asset value, versus the enhancing the revenue of the company. And so that's kind of -- that we just want to maintain that flexibility. And that's what you saw with the ATM.

Appreciate the explanation. Thanks, guys. Good luck.

Yes.

And our next question will come from Don Judy [ph], private investor. Please go ahead.

Yes. Good afternoon. I just had a question on your -- for B stock. What's your thinking is on that? I know you can mandatory convert it, coming this October. Certainly, at the cost led funding [ph], I guess 6% plus the appreciation, you're looking at 8%, 9%, at least. And just kind of what you're thinking right now is what you intend to do with that?

Yeah, I don't think we've made up our mind what we intended to do with it. But I'll give you a bit of a framework on how we think about it. The first is we have a lot of flexibility. I think, we have any time between October and three years from then to make a decision and to do either buyback of cash or to convert it. We want to maintain the flexibility to do either of those things. We think we're in an environment where our stock is going to continue to appreciate. We think they -- asset values are going up in our asset class pretty rapidly. So, there's an art set of arguments about waiting and watching that appreciation and hopefully the stock price will appreciate with it. And then there's a set of arguments like, you begin to make that say, it's a relatively expensive piece of paper. And if we could get it taken out, we should do it sooner rather than later. So we're going to watch it and just do whatever we think is the best for long term shareholder value at the time with an important point that we've -- we don't need to be in a rush. But we're certainly focused on. I don't really have any further answer than that.

Thank you.

And this will conclude our question and answer session. I'd like to turn the conference back over to Paul Pittman for any closing remarks.

Well, thank you all. This has been, as I said, the beginning an exciting quarter for the company. A lot of really good news in terms of what we're going to see come in terms of increased earnings in the coming year, as well as putting some of the litigation behind us and seeing land values go back up and go up strongly. So, we feel like we're in a good place and we'll have a good year in front of us. Thank you for your continued interest in our company. And look forward to talking with you again next quarter.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.