Gladstone Land Corporation (LANDO) Q2 2015 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Gladstone Land Corporation’s Second Quarter 2015 Earnings Call and Webcast. At this time all participants’ lines on the telephone are in a listen-only mode. But later, we will be conducting a question-and-answer session and instructions will follow at that time. [Operator Instructions]. As a reminder, this conference today is being recorded. I would now like to turn the conference over to David Gladstone. You have the floor, sir.

All right. Thank you. And welcome to the conference call for Gladstone Land. This is David Gladstone. And thank you Andrew for that nice introduction and thanks to all you people we have on the line today and we appreciate you calling in. And we always enjoy this time that we can be with you. Hope we have a lot of good questions at the end. We wish we had more time to be with you. But this is sort of once a month once a quarter I mean that we do this. By the way if you’re ever in the Washington DC area, we’re located in a suburb nearby called McLean Virginia. And if you have a chance come by and say hello. You’ll see a great team at work here. We have about 60 members, many more on the road. So, we’re no longer a small business, we have about $1.8 billion in assets across all of our companies. So we’ll start now with Michael LiCalsi. He’s our General Counsel and Secretary. He also serves as a President of Gladstone Administration which serves as the Administrator to all the Gladstone funds including this one. Michael?

Good morning, everyone. This report you are about to hear may include 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. And these forward-looking statements involve certain risks and uncertainties that are based on our current plan, which we believe to be reasonable, and 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 Forms 10-K and 10-Q that we filed with the SEC. And these can be found on our website at www.gladstoneland.com and on the SEC’s website 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 except as required by law. And in our report today as a Real Estate Investment Trust or REIT, we plan to discuss funds from operations or FFO. FFO is a non-GAAP accounting term defined as net income, excluding the gains or losses from the sale of real estate and any impairment losses, plus depreciation and amortization of real estate assets. The National Association of REITs or NAREIT has endorsed FFO as one of the non-GAAP accounting standards that we can use in discussion of REITs. And we’ll also be discussing core FFO or CFFO which adjusts FFO for certain non-recurring charges and adjusted funds from operations or AFFO, which further adjusts CFFO for certain non-cash items. And we believe these metrics improve comparability of our results period-over-period. Please review our quarterly report on Form 10-Q filed yesterday with the SEC for a more detailed description of each of FFO, CFFO and AFFO. The report from our President and CFO, that you are about to hear is an overview of our operations and performance, and we encourage all listeners to read yesterday’s press release and the Form 10-Q which includes a wealth of information for all of our investors. And you can find them all at our website gladstoneland.com. And to stay up-to-date on the latest news involving Gladstone Land and our other affiliated publicly traded funds please follow us on Twitter, username GladstoneComps; and Facebook, keywords, The Gladstone Companies. And you can go to our general website to see more information about this fund and our other affiliated publicly traded funds at www.gladstone.com. And now, I will turn the presentation back to David Gladstone.

All right, thank you Michael. It’s nice to have a good lawyer tell our listeners about the warnings of any reports from public companies. And we aim to follow all the government guidelines in this area. Before we get into the results of the quarter ending June 30, I’d like to give a brief overview of the market environment and the nature of our business for all of our listeners out there. Our business consists solely of owning farmland and leasing it to independent and corporate farmers. These independent farmers are large, not the small farmers. They’re usually in the top 20% of the largest and best farmers in any of the farming areas that we go into. We don’t farm any of the land ourselves, and thus don’t take any direct farming risk. Almost all of the farms we own are concentrated in locations where farmers are able to grow high-value annual row crops such as berries and vegetables. There has been some recent media coverage about declining values of Midwest farmland that’s growing corn and other grains. And that includes many of the geographic areas that grow corn such as Virginia and North Carolina. But please know that we’re not in that area except one small farm, the corn sector is just not part of our primary focus. However, land values in regions in the Midwest where we’re currently looking seem to have hit bottom which may provide a good opportunity to buy some farmland. But if we buy farmland say in Nebraska for example, we’re backed farmers growing produce like potatoes and onions on almost every farm we have, the tenants are growing items that you’d see in the produce section of the grocery store. That is our specialty. I know the produce area because I used to own the second largest producer of strawberries and other berries in the U.S. and I sold that produce company to Dole and kept the land and that was the beginning of this REIT. Corn crop land has declined anywhere from 8% to 12% and two other REITs that have almost exclusive holdings in corn land, well, they’ve been damaged. And now they see their errors and they’re seeking to go into blueberries and I don’t think they have a clue what’s going on in the blueberry marketplace but they’re trying to move out of corn into berries. Now other small REIT is trying to raise money to move away from corn and buy land in California. I really wonder if they’ve studied the California marketplace enough to make that kind of jump. But the geographic regions where our fruits and vegetable farms are located have continued to increase and steady appreciation in both underlying land and the value of the rents charged on those lands, which is evidenced by the several strong lease renewals that we’ve executed so far this year. And that’s because the fruits and vegetables they’re growing have not gone done in prices, probably gone up mostly in prices. And I’d like to dispel people’s concerns regarding the drought in California, and its effect on the water availability for our farms. There is a drought in parts of the state mainly in the Central Valley which is not where our farms are concentrated, all of our farms in California on the coast with exception of one small farm in the valley that’s growing peppers. All of the farms including the one in the valley have wells and they sit on very nice wells and so far the wells have been doing fine. And we’ve been growing crops just fine. And a number of California communities where we have farms have large processing plants that take the affluent from the city and convert it to extremely clean water that can be used to grow crops. The clean water is piped out from the city’s processing plants to our farms which allow the farmers that are renting our land to use either our wells that are on the farms or the city water. So they have plenty of opportunities for water. In addition, many of the coastal cities in California are constructing plants that convert seawater into drinking water. All of their cities there appreciate that because that’s really an unlimited supply. So, at this point we don’t believe any of the farms are at risk of going dry or being without water and a major relief maybe on the way. This year the Al-neo [ph] which typically brings heavy rainfall to California during the fall and the winter seasons is expected to arrive the strongest one on record which, and so this spring of 2016 maybe the last you see of the drought. And one more point, we have two kinds of leases that we offer farmers. First, there is the strictly cash basis in which the ramp has a modest increase, say 1% or 2% or 3% every year. So, and then it goes up to the current market value, it doesn’t go down but it can go up if market values are going up faster. All of our farmers so far have wanted cash rents. Our second type is a participating rent and down South we always call those share cropping. And these kinds of leases we would charge a little less current basis, say 1% cap rate less than the cash base rent. But in return for lower fixed cash rents, we’d get a percentage of the gross sales of the cropped on the land, be say 20% or 30%. This is something many small farmers like because they have a smaller amount of cash need to stay in business. Large farmers make so much money that they don’t want to give up part of their revenue. And since we deal mostly with the larger farmers, the cash rents are almost always requested. And we are now back to the business, we currently own about 11,500 acres and 36 farms across five states in the United States. We also have some cooling facilities, some box barns, and these are structures that are on the farmland and are used by the farmers there. However, investors should expect that the bulk of our assets will always be farmland that is leased to farmers to grow food. We’ve been extremely successful with our leasing strategy to date as we’ve been able to average an increase in rentals of over 16% on all of our lease renewals since our IPO. We believe this underscores the real value that local farmers see in the underlying land which is our properties and where they’re located. And also indicates the upward market trends expected in these areas. I’m not sure what drives all these rental rates up except the basics and have superior farmland like we have is decreasing in amount in both California and Florida. And that of course drives out demand for the remaining farms. We have superior land or you can deliver high yields and superior crops if and various high-demand these days. There is a stronger demand also driving prices, there is a stronger demand for fruits and vegetables and even nuts because people are eating more healthy foods especially organic. So demand is up. And we have some of these organic farms. And some of our farmers want to convert from what they are today to organic farmland. There is another thing that’s pushing all the prices of population increase as the more people there are to feed it takes a lot of pressure, puts a lot of pressure on the value of farmland. And then finally I think the buying power of the dollar is going down as the government prints billions more in dollars. Everyone I know that buys fruits and vegetable complains about the price of produce in the produce section of the grocery stores. However, you want to know we never complain about how much money that our farmers are making from selling produce to the grocery stores. It’s a good sign for us. If I had to point out one thing I’d say that the amount of farms in our regions is relatively finite. And there are no new farms being developed in most of these areas because it’s all been converted. There isn’t any more room there are no more trees to chop down. The trend we’re seeing is a steady decrease in the number of farms in our growing regions as they’re being sold to build homes, apartments, offices, schools, industrial buildings. And once they’re converted to suburban use, they never go back to farms. This causes the farms we owned to be highly sought after as they have been rented for many decades without ever being vacant. And just footnote to keep you in mind here, our leasing practices we generally prefer to keep the same farmer on the same property for as long as possible. Our objective is to be the long-term real estate partner for all of our farmers so they know that they have the farm for as long as they need it or want it. Some recent activity, we acquired two more farms in Florida during the quarter just ended for a total purchase price of about $16 million. The weighted average cap rate on that was about 5.6%. We financed our farms using some of the government sponsored programs at 2.6% so we make 3-point spread on the land that we buy with those mortgages. And we can mortgage a property to about 60% loan to value. So we make 3 points on that 60% and 5.6% on the equity we invest in the farm. You add that up and when you start putting the numbers together, you’re usually somewhere over 8% and maybe as much as 10% return on equity when you start. But that folks is just the start and that seems like a low start. But each year the rent increases here, ours are generally 2% or 3% per year. And the mortgage is fixed so each time their rents bump up a little bit that means the return is going up. And I think this is just like a snowball rolling down a snow covered hill, it just keeps getting bigger and bigger over time. And I think this will be one of the best investments anybody can make. We completed a second offering during the period, we raised about $15 million in gross proceeds, we didn’t want to raise a lot of money, didn’t like the dilution that we’d really take when we raise money. This provided us with the additional capital we needed to close some deals we have coming down the pipeline. Our marketing activities have been gaining significant traction in the marketplace. Now list of possible acquisitions continues to grow. At this point in time we have three farms worth about $30 million under signed purchase agreement. We expect to close during the third quarter that we’re in right. We also have an additional three farms worth about $15 million under signed letter of intent. And we’re moving towards purchase agreements with most of these. But we’re still continuing our diligence process on these last three and in fact everything we’re working on up until the moment it closes is under due diligence. And let me just talk about one of the areas I like to talk about which is net asset value. As most of you know, real estate investment trust, don’t publish their net asset value by going out and valuing their real estate. During the quarter, we updated the valuations of five of our farms, all of which were valued internally. In aggregate, these farms increased by about $900,000 or about 7% from their prior valuation which were about a year ago. So, in one year we’ve got an up-tick of about 7% on those farms. As of June 30, 2015, our portfolio was valued at about $231 million with 49% of this value based on either third party appraisals or actual purchase price and 51% of the total value of about $119 million was determined internally. However the amount of value internally over 96% of that amount or about $115 million is supported by third party appraisals performed between 14 and 29 months ago and with a difference represented in increase in value since that time. So, everything is working here in terms of valuation. These new valuations of our net asset valued showed at June 30, 2015 would have been up but it was down, actually the $13.42 per share is down $0.49 and $0.48 of that was the decrease in the dilutive effect of the offering that we completed during the quarter which we sold at below net asset value. Otherwise it would have been up if we hadn’t done that. And one point I’d like to make on the net asset value and that is we’ve made a significant amount of capital improvements on some of these properties, most in the form of irrigation, upgrades. And the cost of the improvements have not been included as the corresponding increase in the property’s fair value as the projects are still ongoing, some of them are. To put in the numbers in the past 12 months, we made about $2.6 million of improvements on certain of our properties it’s about $0.29 a share. Once these improvements of these projects are completed, we will have properties reappraised and we expect to recapture significant portion, perhaps all of it, of these costs through the value of appreciation. And one additional note, on many of these costs we’ve been receiving additional rent income upon completion of the projects. So we’re not just investing money to maintain, we’re also investing into increase the rents on the extra money that we put into these farms. Once we get past the dilutive effect of the recent offering, the value should begin to tick upward again on a regular basis as the value of our farmland appreciates due in part to the increasing rent and also the surrounding farms and the growing areas, and they continue to go up in price. Just as a note to stock price, yesterday closed to $9.84, which is significantly below the net asset value. Thus we’re hopeful our stock price will rise in the future. So, if you buy this stock today, you’re getting a discount from the estimated net asset value of about 26%, so you’re buying $13.42 worth of assets for $9.84, just a wonderful purchase in today’s marketplace. And while on the way you’re getting $0.04 per share per month in cash distributions, which is almost 5% return. And by the way, this return is greater than the average return you can receive on the entire REIT index which is actually below that amount. Well, that’s enough business discussion. And now I’d like to turn it over to our Chief Financial Officer, Lewis Parrish. He’s going to talk a little bit about the numbers.

All right, thanks David, and good morning everybody. I’ll begin our discussion with our portfolio activity and the balance sheet. We acquired two farms in a single transaction during the quarter, adding about $16 million in new assets to our books. These farms, both in Moakley and Florida are crop land farms for miscellaneous vegetables and were acquired at net cap rate and that’s rental income, net of any property expenses that were responsible to cover such as property taxes of 5.6%. The lease we put in place with acquisition runs for five years and includes two five-year renewal options. We also renewed three leases during the quarter, all of which were set to expire in 2015, at an average increase in straight-line rents of over 9%. And coupled with the lease we renewed during the first quarter which resulted in 33% increase in rent, we believe this underscores the trend we’re in areas where our farms are located. And asset demand for prime farmland such as ours as well as the value of such farmland and the rents the command is continuing to increase. And this sentiment seems to be shares by the tenant farmers in these areas as well. We have no more agricultural leases coming due in 2015 and only one said to expire in 2016. The lease on the Salinas, California property we acquired this past January comes due in October 2016. We’ve begun negotiations with the current tenant and we expect to be able to renew the lease in an increased rate without any downtime. And on to our balance sheet. During the second quarter, our total assets increased by $17 million or about 10% and that’s primarily due to new farm acquisitions, which were funded primarily for our follow-on offering. Also during the quarter, we obtained about $13 million in new long-term borrowings at an expected weighted average effective interest rate of just 2.6%. And these rates are all fixed for the next 3 to 5 years. We’re continuing to use cheaper debt available to us including our Farmer Mac Facility, new notes to the farm credit, and our line of credit with MetLife. And we have plenty of room to leverage up on each of these facilities till we pledge new properties to them. Now on to our operating results. Our operating revenues increased by 6% over the prior quarter primarily driven by our Q1 acquisitions being held for full quarter, as well as the lease renewals we’ve executed so far this year, all of which have resulted in increased rental income. Our core operating expenses which we define as total operating expenses less depreciation and amortization expense, acquisition related expenses, and fee credits received and certain other one-time expenses decreased by about $30,000. This is due to decreases in professional fees and property operating expenses primarily or partially offset by increases in our related party fees. And a quick note of real-estate taxes, we’re currently responsible for the property taxes on 15 of our 36 farms. However, beginning on November 1, 2015, due to the turns of the leases we have on certain of those properties, the tax burn for two of those 15 farms will revert to the tenant. And this should result in annual savings to us of about $171,000. You’ll note in our press release and our 10-Q that we have added core FFO to our disclosures of FFO and AFFO. As Michael mentioned earlier, core FFO is FFO adjusted for certain one-time charges such as acquisition related costs and AFFO further adjusts core FFO for certain non-cash items such as converting straight-line rents to cash rents. We also modified how we present AFFO this quarter. We were previously adjusting AFFO based on the cash rental payments received during the period. However, unlike most other REITs the majority of our tenants pay on either an annual or semi-annual basis. As these payments are not made monthly, this can skew comparability on a period-over-period basis depending on the timing and size of the rental payments. To improve the comparability of our AFFO we modified the adjustment for cash rents to include only the portion of cash rents due for the lease that pertained in the respective periods. Per share earnings from core FFO and AFFO for the quarter were $0.101 and $0.85 respectively, compared to distributions of $0.12 these figures represent a decrease of $0.32 and $0.38 per share respectively from their previous quarter. However, the first quarter was aided by $321,000 credit we received from our advisor which accounted for $0.04 per share increase in the quarter. If we remove that credit from Q1 on a quarter-over-quarter basis, core FFO would have increased by $142,000 or $0.01 per share and AFFO would have increased by about $82,000. For the six-month period, our per share earnings from core FFO and AFFO were $0.233 and $0.207 respectively compared to distributions of $0.225. And just a quick update on the property and casualty recovery, we received $21,000 of insurance proceeds during the quarter and we received the remaining $76,000 subsequent to June 20, which will be recognized during Q3. The claims have now been closed and we are not expecting any additional recoveries. Turning to liquidity, we currently have about $2 million in cash on hand and $17 million of availability under our MetLife facility. All of our current properties are now pledged under one of our borrowing facilities and if we assume an LTV of 60%, our current buying power is about $41 million. And regarding upcoming debt maturities, we only have about $100,000 in principle payments coming due through the remainder of 2015 and we also have a $2.3 million amortizing payment due in our MetLife mortgage note that is due in January 2016. Going into the second half of 2015, we believe we are beginning to achieve economies of scale resulting in stabilization of our operating expenses. And going forward, we expect that you’ll see the new acquisitions to have a more direct and positive impact on our bottom line. And with that I’ll turn the program back over to David.

All right, Lewis, thank you very much. Good report. Main report this time is to tell you that we are continuing to execute our plan. We invested $143 million in new bond acquisitions and the IPO and we have several other deals in the pipeline that we expect to close in the coming months. With an increase in the portfolio of farms comes greater diversification and protection for investors and we also expect better earnings. We expect many of the farms we acquired to be purchased from farm owners that do not farm the property but rather lease the property to the farmers, about 38% of farms in the United States owned by individuals but not farmed by the owners, they rent them out. In those situations, we just intend to put in our leases as soon as that lease expires and simultaneously with the acquisition just bring them under the roof here, and continue to work with them. In addition to the drought in California and other question people ask us is, why we’re not in hard grains like wheat and corn, and the reason is prices are very unpredictable. For example, corn can be about $3.60 a bushel and the go as high as $8.50 a bushel as it was three years ago. Price of corn has been under $4 for the last three years and farmers just don’t make any money with corn at under $4. We stay away from corn because large variations in price and people always say they can store grain but it’s very expensive and you have to sell it at some point, you can’t keep it dry and protected for long-long periods of time. And in terms of economic outlook, we think farmland has performed extremely well in the past 10 plus years compared to other asset classes. And farmland has provided investors with a safe haven during the recent turbulence in the financial marketplace. This is evidenced by the increase in price of fruits and vegetables that we’re seeing at the grocery store. And most of all farmland has historically been an excellent hedge against inflation. Our business thesis is very straight-forward. There are more people in the world every year, people have to eat. Farmers need farmland to grow food. Yes, I know, I’m reminded from time to time about greenhouses but I’m telling you, we’d all starve to death if we had to live off the very tiny amounts of food that’s grown in greenhouses. It’s just not there. It’s farmland. Farmland today is being converted to non-farm uses, so there is less farmland to grow food. There is no replenishment of farmland, there are no more trees to cut down and turn into farmland where our farms are. We’re buying power of the dollar, it’s just the buying power of the dollar continues to be decreasing amount in terms of what the government is printing. And therefore farmland is becoming much more valuable every year with such a limited supply. We’ve increased our monthly cash distribution rate to shareholders twice so far this year resulting in the 33% increase in our monthly cash distributions. Probably would have done it again if we hadn’t raised the money as we did. And so, we got to put that money to work before we can raise the dividend again. In July, the board voted to maintain the monthly cash distribution of $0.04 per common share per month for third quarter. As of today we made 30 consecutive monthly distributions to shareholders. We’re projecting a strong production and income growth in 2015 and if expectations are met, then we hope to be able to increase the dividend again in the future. As the largest shareholder, as I’m working hard to increase the distribution, I like dividends as much as anybody does. With the stock price currently around down $9.84, the distribution run rate is just a little shy at 5% which is higher than the entire REIT index if you take all of 172 of them out there. And the writers of farmland REITs always talk about how the stock has not grown but they forget that we all pay out our income in the form of dividends and never seem to count the dividends we paid out. And since our public offering in 2013, we’ve paid out $2.11, it’s not shabby. But please remember that purchasing stock and this is really a long-term investment in farmland. It is in part an asset just like gold except it’s an active asset with cash flow to investors. We know as Warren Buffet’s comment that he’d rather have all the farmland in the U.S. than all the gold in the world. His son has a lot of farmland out in the Midwest and we agree with Warren on this one. We expect inflation of food to be strong and the value of farmland to increase. That’s our business model and it seems to be working. I look at this farmland REIT as a way to hedge against inflation, as food prices and other things go up in price I think this is better hedge than buying gold. And for those looking for an asset that does not correlate with the stock market, well this is it. Now, we’ll have some questions from our loyal shareholders and analysts who are out there about this wonderful company. So, operator? If you’ll come on and tell them how they can ask some questions?

[Operator Instructions]. Our first question for the day comes from the line of John Roberts from Hilliard Lyons. Your line is open.

Good morning, David.

Good morning, John.

Given, in your sort of correlated to the same question I asked you on the commercial call, given the current stock price, it would seem to be somewhat constraining on your ability to raise capital I mean given your last offering was what $0.49 dilutive. I would assume you wouldn’t want to do a whole heck of a lot more offerings in here. Any thoughts on what you’re going to do for capital beyond the $42 million you’ve got in buying power?

I think the $42 million is going to allow us to move forward pretty strong. And then we do have some people that have evidenced the desire to take up REIT shares, we haven’t done any of that. So we’re hopeful not to do a lot of that as well. We are planning to take a look at the ATM program to see if we can put smaller amounts of stock out rather than doing large offerings. But at the end of the day, some point in time, maybe sometime next year we’re going to have to raise money. And we don’t want to do it at this price. And so we may have to take a little vacation in terms of doing deals if that’s what it takes. We can’t keep this kind of dilution the $0.48 hurts a lot. But at the same time you’re going to see the $0.48 go away from the appreciation of the properties. So, from my perspective it was not a good thing to do but sort of a necessary evil. You’re right it is constraining.

Yes, yes. Any thoughts on non-traditional stock proffered etcetera?

Well, unfortunately we like to do some proffered it’s very expensive. But we’ll consider that proffered trading at maybe 6.5% and pretty much eat up most of the profits that we’d be able to make with that. But with the proffered that we could take out say in two or three years, that might be a way of looking at the world of paying a little higher price for our equity in terms of what we had to pay in the past. And at the same time keep things rolling along. But you’re right on target, we have to use - not use our common stock but use some proffered in order to keep the growth going.

Yes, I guess, unlike some of the others where your yield on investments is a little higher because the yields on these farms are so low, it would make proffered a little more difficult?

Well, it’s not that difficult. If you use proffered and you were getting 6% or 6.5% for your proffered and you’re getting return on equity which the proffered would be counted as 8% to 10%, there is a spread. It’s just a much smaller spread.

Right. Okay. Thanks, David.

You’re welcome. Next question.

Our next question comes from the line of Rob Stevenson from Janney Capital Markets. Your line is open.

Hi, good morning guys. David, in addition to the three farms that you have under purchase agreement and letter of intent, I mean, what’s been the sort of magnitude of the deals that you’ve looked at over the last three, six months. And if you had a stock price that was closer to your NAV, I mean, how much opportunity are you seeing out there returns that are acceptable to you guys to be able to buy on a quarterly basis?

Yes, we see a lot of farms and quietly frankly we, just for an example, we turned down one of the blueberry farms that somebody else did simply because it was a very poor farm with not a very good farmer. So we’re just, Rob, at this stage of our growth, we can’t make any mistakes, I can’t get on the phone and tell you and others that one of our farms is not working the way we thought it was going to work. And that’s an exception. We’re just going to make every one of them count. Once we get up around $400 million to $500 million in assets, I think we can take a few more risks. We are looking at other areas. As you know, we opened the office in the Midwest, we now have three farms that we’re looking at, I think two of them will close. And so, we’re starting to see some things in the area, the area in the Midwest is quite a bit different because it’s mostly very staple oriented that is potatoes, onions, carrots, those kinds of things are grown in the Midwest, at least as far as we’re looking at we’re not looking at the corn farms or the wheat farms for that matter. But the bottom line is as we open that up, that will produce more. We’re still seeing plenty of farms in Florida and California, and in addition we are looking at some different crops. We’ve been offered some opportunities to go into the three areas such as nut farms, which are very good right now. I don’t know what we’ll do but we’re looking at a lot of different things. And quite frankly I have not been pushing as hard to get things close simply because the stock price is so low that I was worried that we would run out of money. So, we’ve been more particular than we would be. I would expect that instead of $30 million we could probably do $60 million pretty easily if the stock price was right.

Okay. And then, thoughts on what you’re seeing from a - just from a competition for the better deals, I mean, Oracle in the journal yesterday about TI crops fund of decent size, I mean, not only targeting U.S. but other markets as well. But how much in another public company that could be coming out etcetera, I mean, what are you seeing when you go out there and you’re looking for deals in your sort of core markets, how competitive is it today?

Well, most of the folks that are in the public side of the business are doing corn and grains. And so we’re just not seeing them at all other than the one blueberry farm I mentioned. But there is a listing for another public company that is pretty much all over the board in terms of things that they’re doing, and pretty good folks there. They’ve got plenty of money so they will continue to grow. But they’re doing a lot of development deals. And a development deal would be something like taking 200 acres and that don’t have anything on them that is it was probably unused farm and trying to change it into a farm by planting trees on it and say nut trees. Those nut trees won’t start producing for three to five years, so they don’t have any income in the early years. However, later it would be a big up-charge in terms of the amount of stock that’s coming in. So, we don’t do development deals, I would love to do some. We see them around but quite frankly again, we are very dividend driven. So as a result, we’re only looking at things that will increase our dividend. And as far as TI craft, is concerned, we’ve seen them mostly go overseas. They’re heavy in a lot of different countries, for example in Latin America and Australia as well as in I think there is some in Africa as well. We haven’t seen them that much in the United States although they have a lot of properties that they own in the United States. They were selling some trees in California, I think they were worried that those trees were in the valley and they wanted to get rid of them because of the drought. We did see them once they were the stalking horse on the only auction that we’ve gone to in the last year. And quite frankly we out-bid them there and that was a surprise to me because I thought they would throw money at most anything. And we got a very nice cap rate on a farm that I actually farmed when we owned the strawberry company. And then we saw them once up in Oregon and they have some problems, some legal problems of giving the person we were buying, this was the sale on lease-back, we were buying it from them and they were leasing it back. But they wanted the option that if someday we decided to sell, we would give them the right to look at it first and offer first. We don’t plan to sell anything, so it was no problem for us. But I think the guys in the pension area had some problem with that, I don’t know what it is there was a legal problem there. So, we knocked them out of the box there. And those are the only times we’ve seen the craft people, they are monstrous size, I mean, the pension fund itself has got to have $3 million to $4 million worth of land that they own all over the world. Hope that answers your question?

All right. And then just lastly, you expressed trepidation about issuing OP units, is that just the same issuing stuff at 20% discount NAV or is there something about the structure that troubles you?

No, it’s not the structure. You may remember we were on the board of Capital Automotive REIT. We issued a lot of up REIT shares and it worked extremely well. I think the problem was offering up REIT units right now is the fact that our stock price is so low, I mean, if we could offer up REIT units convertible at $15 a share, we do it all day long. But issuing it at under $10 and so far of the net asset value, it’s the same thing as offering stock. So we haven’t been pushing the OP units. And I think at this size, and the farmers we deal with are not small farmers. These are very sophisticated knowledgeable farmers. They want to know that we are big strong company and at couple of hundred million dollars in assets, we look big to a lot of people but we’re actually small as you know when it comes to other real estate investment trust. So, it’s a little bit harder to convince a farmer like and I’m sure we’ll never be able to convince Dole or some of the other large farmers that up units would be something they should own.

Okay. Thanks guys.

Next question.

[Operator Instructions]. And that looks like all the questioners that we have in the queue for today. So, I would like to turn the call back over to Mr. Gladstone for closing remarks.

All right, thank you all for calling in. I would see you again next quarter. And that’s the end of this call.

Ladies and gentlemen, thank you again for your participation in today’s conference. This now concludes the program. And you may all disconnect your telephone lines at this time. Everyone have a great day.