Good day, ladies and gentlemen, and welcome to the Gladstone Land Corporation’s Second Quarter Earnings Call and Webcast. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the call over to David Gladstone, Chairman and CEO. You may begin.

Okay, thank you so much and welcome to the conference call for Gladstone Land. This is David Gladstone and I appreciate the operator's nice introduction. Thanks to all of you people that are calling in on this line and we really enjoy this time that we have with shareholders and wish we had more of these calls. And please if you're ever in this area, over the Washington D.C. area, we are located in a suburb called McLean, Virginia, just outside of Washington D.C. and you have an open invitation to stop in and see us if you're in this area. You'll see a lot of great people here, about 60 members now, and we manage about $1.5 billion in assets. Also, some of the people bring their dogs to work, so we’re very dog friendly environment. So you might see a few puppies when you come to see us here. We'll begin with Michael LiCalsi. He's our General Counsel and Secretary, also serves as President of our Administrator and he has some important information for all of you listening.

Good morning, everyone. This report that we’re about to give may include statements that may constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, including statements with regard to the future performance of the Company. These forward-looking statements involve certain risks and uncertainties that are based on our current plan, which we believe to be reasonable. There are many factors that may cause our actual results to be materially different from any future results expressed or implied by these forward-looking statements, including all of the items listed under the caption Risk Factors in our Company’s Form 10-K and 10-Q reports that we file with the SEC. These reports can be found on our Web-site at www.gladstoneland.com and on the SEC’s Web-site at www.sec.gov. The Company undertakes no obligation to publicly update or revise any of these forward-looking statements, whether as a result of new information, future events or otherwise. And in our talk today, we will note that we intend to be elect REIT status, to be elect to be a Real Estate Investment Trust, and therefore we plan to talk about funds from operations or FFO. Since FFO is a non-GAAP accounting term, we need to explain that FFO is defined as net income, excluding the gains and losses from the sale of real estate and any impairment losses, plus depreciation and amortization of real estate assets. The National Association of REITs or NAREIT has endorsed FFO as one of the non-accounting standards that we can use in discussion of REITs. Please review our Form 10-Q filed yesterday with the SEC and our financial statements for a detailed description of FFO. And we also plan to discuss core FFO which we define as FFO adjusted for property acquisition cost and certain other one-time charges. We believe this is a better indicator of the operating results of our portfolio and allows comparability of period over period performance. To stay up-to-date on the latest news involving Gladstone Land and our other public funds, please follow us on Twitter, username GladstoneComps; and on Facebook, keywords The Gladstone Companies. You can go to our general Web-site to see more information about this Company and our affiliated publicly traded funds at www.gladstone.com. The report from the Company’s President and CFO that you are about to hear is an overview of the Company’s operations and performance, and we encourage all listeners to read yesterday’s press release and the annual report on Form 10-Q that was filed yesterday with the SEC. There is a lot of good material in the documents that will help any investor and you can find them all at our Web-site, www.gladstoneland.com and on the SEC’s Web-site www.sec.gov. And now, I will turn the presentation over back to David Gladstone.

Okay, thank you, Michael. Before we go into the numbers, let me update newcomers on the call about the history. We began operations in 1997 as a fully integrated berry and vegetable grower, shipper, marketer. We had about 2,500 employees. We were the largest integrated strawberry operator in the United States. In 2004, we sold the agricultural operating business to Dole but kept the farmland. Dole became our largest tenant, still is today, but much smaller percentage than it was back then. Since then our business has consisted solely of owning farmland and leasing it to independent and corporate farmers. The farms we own are predominantly concentrated in locations where farmers are able to grow high-value annual crops such as berries and vegetables. These are row crops which are planted and harvested annually or sometimes more frequently. We also have some farmland that's farm for blueberries which are permanent crops and the blueberry bushes may last for up to four years. Typically blueberries are farmed by many of the same fruit farmers who grow berries and vegetables and they are also sold to similar customers such as supermarkets and wholesalers. We like blueberry business because there is a variety of the blueberries that are harvested by machinery, and as all of you know labor is one of the increasing costs in the farming business. Also we have acquired some farm related properties, not many of them, such as coolers, coolers are used to cool the produce and all the berries whatever before they are shipped, and then we have one box barn that houses thousands of boxes that are needed for shipping. We also are looking at other things like processing plant, packaging buildings, some distribution centers, but those really aren't the highlight here. Investors should expect the bulk of…

Good morning, everyone. I'm excited to be the new CFO here at LAND and I look forward to having many more positive calls like this one. I'd like to start with an update on our REIT status. We've been monitoring our compliance with all REIT requirements very closely and have noted no issues to date. As such, we plan on filing our 2013 tax return later this month on which we intend to officially elect REIT status. This status will be retroactively effective as of January 1, 2013. As long as we qualify as a REIT, we generally will not be subject to federal income tax so long as we distribute at least 90% of our taxable income to our shareholders. And now I'll discuss the financial results beginning with the balance sheet. During the second quarter, our total assets increased only slightly, by about 2%, due to the acquisitions we made during the quarter being funded mainly by cash we had on hand. As David mentioned, we acquired five new farms during the quarter worth $11.2 million. These farms will provide us with approximately $590,000 of additional revenue on an annual basis, which equates to an annual return of about 5.3%. And we also closed on two more farms worth $12.7 million subsequent to quarter end. These farms will provide us with additional rental income of approximately $390,000 over the first year and $640,000 annually thereafter. This is due to a follow-on lease we executed on one of the properties not kicking in until 2015. And please note, these are figures per the leases, before any cost segregation has been completed or any values assigned to above or below market leases. Our portfolio of properties and tenants are much more diversified than they were a year ago. Our 28…

Alright, thanks Lewis, good report. We just recently finished our first year as a public company, that was in December 31, 2013, and now we are finishing up our second year, and it's been very expensive to get this off the ground. I shudder to think how much these small businesses have to go through and now we're in the second half of the second year and it's far less expensive as it's a lot easier for us to continue forward. The main point of this report today is to tell you that we have executed our plan. We used our IPO proceeds to acquire new properties and we've since been borrowing on our MetLife facility to acquire additional properties. And since the IPO, we have acquired 16 new farms for $62 million and we are hoping to add more over the next few months and certainly more by the end of the year, and we have a very nice list of potential properties and we are interested in acquiring through that list and we hopefully able to grow the farm portfolio significantly during the rest of 2014. With the increases in the portfolio of farms comes greater diversification and protection for investors and we also expect a lot better earnings over time. We anticipate that many of the farms we'll purchase will be acquired from farmers or agricultural companies, and they or the independent farmers will simultaneously execute leases on the farms for us. This type of transaction provides the tenants with an alternative to other financing sources such as borrowing or mortgages on the real estate or even selling securities in their company. So, we expect many of the farms we acquire to be purchased from farm owners that don't even farm the farm, they are just holding…

(Operator Instructions) Our first question comes from Daniel Donlan of Ladenberg Thalman. Your line is open.

David, I appreciate the comments on the dividend. I guess for what it's worth, I think a 3% yield is actually fairly good considering that you're typically going-in cost basis on the farms is 5%. So I'm really not expecting that yield to move up that much and nor do I think it needs to. But just to start off with a couple of questions really for Lewis, in terms of how we should be modelling West Beach and San Andreas, when exactly do the rent increases start to hit the gap? I think David said fourth quarter but I think since at least I think San Andreas, since that was an extension already, does that start to hit in the third quarter or can you walk me through the accounting not only in San Andreas but in West Beach and when that starts to hit the gap?

Sure. San Andreas, we executed the extension in the middle of June. So we did begin implementing the new lease rates in that month but you're only getting half a month for the current quarter. It will be implemented fully in the third quarter, but the cash rates don't increase until January 2015, but they will be reflected in the rental line item in the third quarter. West Beach, it is with a new tenant. So that one will not be reflected until I believe it's November 1.

That's right.

So that won't be reflected in the financials until Q4.

Okay. I guess I'll follow off-line with you with kind of the gap in cash difference because that's going to be, it's going to change around my adjusted funds from operations. And then as far as the acquisitions you made in the quarter, I think you said it was 5.3% implied GAAP cap rate. What was the cash cap rate or does that kind of bounce around given kind of the structure of some of the leases?

On the cash cap rate, I don't have that figure in front of me but we can get back to you on that one.

Okay, alright. And then, David, as far as the acquisition pace has gone, it's really picked up since you hired the person in California, is there any cyclicality to the acquisition pace? I lot of the net lease REITs that I know are in a completely different business than you, the most or the bulk of their acquisitions are really done in the second half of the year. Is there some cyclicality to the farmland business as well where most people tend to sell at the end of the year versus the beginning?

A lot of the farmers like to sell as they are finishing up their existing crop. So if you were in Florida, you'd probably see them interested in selling sort of in the April-May timeframe, would be when they are finishing up their crop. So they want to sell before they have to plant the crop again. And it would be the reverse in California, you'd see that change. So it depends on where you are, it depends on the seasons, it depends on the crop, but there's really no seasonality like you'd see in other REITs, that is everything happening in the second half. For us, as you remember, we were struggling to get our MetLife loan closed not because of the businesspeople but because of the legal changes that they wanted then. So the lawyers took control. And so as a result, it slowed us down dramatically in although the first quarter and in part of the second quarter, but we closed that and we're in great shape now. So you should see – and if you know my approach to life, I won't make commitments that I can't fill and I didn't want to take any chance in making any commitments during that time that we didn't have the loan in place with MetLife, so unfortunately we did had to slow down, have to slow down a lot, and in fact we did none for many months. But now with new lenders approaching us, and we hope to close on one hopefully in the next 30 to 60 days, we'll have two lenders and then hopefully we will have three or four, and so it will make it a lot easier to predict that we're going to have money and we can make commitments. So, my guess is there will be nothing other than straightforward, yes, there will be times when we'll hit a bump somewhere and not close something in one quarter when we thought we were going to close it, but at the end of the day I don't think there's going to be any cyclicality.

Okay. And as far as kind of how we should model future capital allocation, I'm just going to have everything go on the $100 million note payable that you have and it looks like that's at a rate of 3.5%, but does that rate somewhat change going forward or how should we look at what the interest rate is going to be on future purchases?

It depends on who we finance with. We have other lenders who have different terms and conditions, and I guess what we could do is give you some indication when we do one of these financings or some of these financings, maybe Lewis can line that out for us, on 10-Q or 10-K or somewhere along the line, so we start to get a better feel for that. But yes, at the end of three years we have to adjust to the market and MetLife. So it's not a 25 year fixed rate and some of the others are longer-term, shorter-term, we're just beginning to get our act together with a number of lenders. If you remember what we do in our other REIT, we may have 10 different lenders that we go to in order to finance something. We're still in the early stages of growth here, so it's going to take us a while to accumulate enough lenders that we can, for lack of a better term, play one-off against the other and get the best deal for our firm. We're sort of captive with MetLife now and probably will be for another year in terms of the major amount of our borrowings, but I would expect within, I don't know, let's say 24 months we will be at full course with four or five lenders.

Okay, but the fixed rate is 3.5% for at least the next three years, is that correct?

That's correct, when we pull it down the fat end, and then the revolving line is currently at about 2.75% but that changes frequently.

Right, right, okay. And then as far as CapEx, it continues to remain elevated versus what my expectations were. What's diving that, is that going to continue? It seems to me that, I'm not sure what you expensed in the quarter, but some of this stuff that you're doing that you're getting a return on, I wouldn't think that's flowing through CapEx but I'm not positive either.

Here's what goes on. We bought a couple of farms that needed a new well and we priced that in, but it doesn't really kick in until we spend the money. And we've put in, I don't know how many, we've probably put in five, six wells, we've got one or two more to do, when they finally kick in, we're able to raise the rent based on them being in place. And so as a result, we can give you a little more color on that each time it happens, but at this point in time it's just the way we do business. And sometimes you can have a much better purchase of a farm. I'm trying to remember exactly what we did in the Valley in Arvin, California. I think we were putting in one new well there and the tenant is ready to pay rent on that as soon as it's put in place, and we'll drill that well, it's just an additional well into the property, the property has good water, but we like to have plenty of water on those properties. And if you remember, the press release, the man, the farmer there is a top-notch farmer and he's growing hot peppers on there and they need a lot of water. So we want to make sure we've got plenty of water. It's just a nature of the beast and we always try to negotiate that if we're going to have to put in another well when we buy the property and lease it to somebody, that they're going to have a bump-up in the rent to take care of the amount that we spent on putting in a new well.

Okay. What I mean is, I think if you're getting a return on that CapEx immediately, I'd be a little bit punitive to kind of include that in your adjusted funds from operations?

Sure.

And then so lastly, and a little bit of a sticking point with me, but this decision to add back the acquisition cost to FFO, some of your peers do this, some of them do not. I guess and I'm kind of curious as to what these acquisition costs are. I think most people that add back acquisition costs and do it the right way, they're adding back brokerage costs and things that they had to pay to the seller. It seems to me from reading your disclosure, these acquisition costs are related to payments to the people at your external advisor, which is fine, it's just I'm not sure adding it back is appropriate maybe for FFO purposes given that your G&A is relatively low and all these different fees that the manager charges that's just part of the overall G&A in my view.

No, no, wait just a minute. Let's understand what this is. This is legal cost, it's survey cost, it's Phase 1, Phase 2, those kinds of things that are being added back that are one-time costs that we have to put in place simply because you need legal obviously and you need Phase 1s and Phase 2s. The lenders won't lend to you unless you go through all of that. They all want to know that there is a survey and they all want to know all of these pieces that we have to put in place in order to get a loan on it. So the appraisal for example, every lender wants an appraisal land, we have to pay for it. So that's what we're adding back. These is not fees that are coming to us, it may be fees that the management company paid on behalf and then are being reimbursed, but that's where it's all added. Sorry if I interrupted you. Go ahead, Dan.

No, that's fine. It's still a cash expense though and it's still a necessary cost of doing business. You can add back what you want to FFO, I just wanted a little more clarity, you gave it to me, but I think some of your peers do this, some of them do not, I just wanted to just make the point.

Okay, alright. Do we have any other questions?

Our next question comes from Brian Hollenden of Sidoti. Your line is open. Brian Hollenden - Sidoti & Company: On the acquisition front, have you seen any compression in cap rates, and if so, how will that affect your potential purchases?

We have seen some. Some properties have gone up substantially in price because there's been others that wanted to buy it. Local farmers are really our competition. So somebody next door who owns a farm and the other farmer next to him is going to sell his farm, that's who we end up pricing against. And generally speaking, if there's a farmer next door, they may be willing to pay a lot more than we do, and we've lost a couple of farms that way in which the farmer is willing to pay say a 3% cap or even a 2% cap and we on the other hand are trying to stick to our formula for making money here. So, yes, there is some compression out there but we've not seen as much as you may have expected. I think you see a lot of that in the Midwest. When the Midwest corn prices are $8.50, the farmers come out with their check book and bidding on just about anything. Today it's a very different story out in the Midwest because farmers aren't making very much money, and so even there's been some compression of rents out there in which the farmers are renegotiating their rent with their owners, with the owner of the property. So, yes, there is compression. I don't think it's widespread, I think it's episodic that as and when something comes up and it just happens to have somebody next door. We did see one very large farm that went to auction in Florida. We saw a huge compression there because it was just too close to being developed. So if you're up against a developer, you're probably going to lose every time because they're not looking at cap rates and farming, they are looking at what they can convert it into, houses or buildings or whatever. So, we almost always lose to developers. Any other questions, Brian? Brian Hollenden - Sidoti & Company: Yes, just if I can add one quick question. So how much generally do you plan on spending over the next 12 months on acquisitions? Just doing the math here on the mortgage note and the line of credit that's remaining, is about $70 million the way to look at it in the next 12 to 18 months, if you can comment on that a little?

That's what we tried to pencil out. It's hard to know, we're just doing our first closing, we're trying to do our first closing with another lender, and we've not asked MetLife to increase theirs from the $125 million that they have in place, although they have been certainly willing to talk about that. Probably won't do any of that until probably next phone call. When we close out the September quarter and have our call, we may have a better figure for you and more understanding on that, but I think that's the round number that you could use to program in over the next period of time. Brian Hollenden - Sidoti & Company: Okay, thank you. And then if I could ask one quick question, you talked a little bit about the drought and it not affecting you. Is there any way that it could potentially impact your business, whether it'd be buying farms cheaper or impact any of your current tenants, can you talk about any potential risk that would be to your business regarding the current drought in California?

Sure. Droughts are always a disaster. If you go back into the 30s when there was a huge drought in the Midwest and farms turned into dust, farmland that's in dust isn't worth anything, and you remember from studying history how bad that was. So you could have that happen to the cornfields and you could have it happen to California. California in essence is a desert nine months out of the year. If you didn't have the ability to pull water out of the ground or out of these facilities that turn sewage water into potable water, if you couldn't do that, California would be very, very desolate today. And we've had some farmers in the northern part of the Valley run into environmental situations in which they've been protecting a small fish up there, some kind of smelt, in which the water has been going to the smelt and not to the farmers. And then the water not only keeps the smelt alive but it goes all the way out to the ocean. So there's fresh water being pumped out to keep the small fish alive but denied to the farmers who are growing food for all of us to eat. Seems crazy to me but I'm not into the environmental world enough to be able to judge that. But yes, it could get worse, it could be a drought for the next 10 years that might impact the wells that we all have out there. California has not been very strong in the use of RO, which is reverse osmosis, where you take seawater and turn it into fresh water. That's used a lot in Mexico where there isn't very much water. And so as a result, I think California is going to have to wise up at some point in time and let farmers use reverse osmosis so that they can irrigate the farms out of the sea. Anyway, Brian, I think today we're okay. I can't forecast the future any better than anybody else but California has been around for a long time and the farmland that we own has been farm for a long time, but that doesn't guarantee anything. God only knows when it's going to rain again in California. Brian Hollenden - Sidoti & Company: Alright, thank you very much for your comments.

No more questions it sounds like.

(Operator Instructions) I'm showing no questions at this time. I'd like to turn the call back to David for closing remarks.

Alright. Thank you all very much for attending and that's the end of this program.

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