Welcome to the quarterly call for Gladstone Land. [Operator Instructions]. I would now like to introduce your host for today's conference, Mr. David Gladstone. Sir, you may begin.

Welcome to the quarterly conference call of Gladstone Land. This is David Gladstone and thank you Lillian for that nice introduction and thanks to all of you for calling in today we really appreciate you calling in. We always enjoy these times that we have and hope that you’ve a lot of good questions at the end of this. We wish we have more time to do these kinds of things but we only do it once a quarter so this is your chance to ask some good questions and by the way folks if you are ever in the Washington DC area, we are located in nearby suburb called McLean Virginia and if you have a chance just come by and say hello, you will see a great team members working here. We have over 60 team members now and manage almost $2 billion across our four public companies. We are going to start today with Michael LiCalsi, he is our General Counsel and Secretary and he also serves as a President of Gladstone Administration, which is the administrator for this fund and all the Gladstone funds, including this one. Michael?

Good morning everyone. This report that you are about to hear may include forward-looking statements within the meaning of the Securities Act of 1933, and 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 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 the Risk Factors listed in our 10-Q and 10-K that we file with the SEC and it can be found on our website gladstoneland.com and on the SEC's website at www.sec.gov. And 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 gains or losses from the sale of real estate and any impairment losses, plus depreciation and amortization of real estate assets. And the National Association of REITs has endorsed FFO as one of the non-GAAP accounting standards that we can use in discussing REITs. And we'll also be discussing core FFO today or CFFO, which adjusts FFO for certain non-recurring charges such as acquisition related costs and we also plan to talk about adjusted FFO or AFFO, which further adjusts CFFO for certain non-cash items such as converting GAAP rents to cash rents. We believe these metrics improve comparability of our results period-over-period. And our annual shareholders meeting will be held next Thursday May 12 at our offices here at McLean Virginia and we invite you all to attend the annual meeting. We also ask that you please vote your shares so we can ensure quorum for the meeting and stay up to-date on the latest news involving Gladstone Land and our other affiliated publically traded funds, please visit us at Twitter, at username GladstoneComps and Facebook, keywords, The Gladstone Companies and you can go to our general website to see more information about this company and the other publicly traded affiliated funds at www.gladstone.com. Now the reports from our President and CFO that you’re about to hear will be an overview of our operations and performance and we encourage all listeners to read yesterday's press release and the Form 10-Q which include wealth of information for our investors and you can find them all on our website www.gladstoneland.com. Now, I will turn the presentation back over to David Gladstone.

Okay. Thank you, Michael, a good report. Well we had another strong quarter to open the year 2016 about before we get started I would like to give a brief overview of the market environment and nature of our business. Our business is soling of owning farmland and leasing it to high quality farmers, we don't farm any of the land ourselves and thus we don't take any farming risk. The farmers we lease are farms too are usually in the Top 10% to 20% of the largest and best farmers in any of the farming areas that we go into and we generally prefer to keep the same farmer on the properties that we own for as long as possible as they tend to know the nuances of operating that particular farm. Our objective is to be the long term real estate partner for all of our farmers so they know that they have that farm for long term. Most of our farms and the investment focus continues to be on locating where the farmers are able to grow high value annual row crops such as berries and vegetables. Over the past year we've also taken advantage of some favorable circumstances in the Midwest where we found some excellent opportunities, we've also furthered our expansion into permanent crops such as almonds and pistachio orchids. However you should expect that the large majority of our farm lands will continue to be leased to farmers to grow fresh food that you can find in the produce section of your local grocery store. The geographic regions where our farms are located continues to experience steady appreciation in both the underlying land values and therefore the rents charged on the land. And that's partly because we only purchase irrigated cropland with great soil…

Thank you, David. Good morning everybody. I will begin our discussion this morning with our balance sheet. During the first quarter our total assets increased by $28 million or about 12% due primarily to new farm acquisitions which were funded through a combination of debt and equity. In connection with the purchase of our Colorado farms we obtained about $16 million in new long term borrowings at a weighted average interest rate of 3.05% which is fixed for the next seven years. We also issued about $6.5 million of OP units as partial consideration for these farms. And in connection with the pistachio farm we acquired subsequent to quarter end, we obtained an additional $9 million of new long term borrowings at an expected effective interest rate of 2.79% which is fixed for the next five years. We borrowed these funds from a new lender expanding our lending base to four different lenders now. We're continuing to decrease our overall borrowing costs and further diversifying our lending base provides us with even greater access to cheaper sources of capital. Now into our operating results, for the fourth consecutive quarter we've continued to grow both our core FFO and adjusted FFO as they increase by 7.5% and 8.7% respectively over the prior quarter. Our operating revenues increased by 8% from last quarter but we expect a more significant jump in Q2 considering the timing of our recent acquisitions and the additional income that we will be earning from certain capital improvements will be made on some of our farms. And I'd also just like to point out really quickly that when compared to the same quarter last year our rental revenues on a same property basis increased by 5.7% and that was mostly due to the leases on those properties being…

All right, nice report Lewis. This company just continues to get better every year. The main point in this report is to tell you that we’re continuing to execute our plan we have invested $35 million in new farm assets since 2013. We have some other farms in our backlog we expect to purchase during the summer. With this increase in portfolio of new farms, coming on just gives greater diversification and protection to our investors as we expect better earnings over the next few years. As most people know our funds specialize in farms that grow fresh fruits and vegetables. We have a historically avoided being heavily in farm land that grows traditional commodity crops such as corn and wheat, major reason for this is we believe investing in farmland growing crops that contribute to a healthier lifestyle as one approach to our life such as fruits and vegetables and nuts, in addition more than 90% of our portfolio is GMO free and we are continuing expanding our ownership of organic farms, through both the acquisition of new farms and the conversion of existing farmland to an organic ground. With the recent decrease in corn and corn land values we've begun to look at some of the Midwest properties that grow corn as long as they can be complemented by other crops on the same portion of the land, like our recent acquisition in Arizona, Colorado and Nebraska as you may know. Rents in many parts of the Midwest are down and anywhere from 8% to 12%, the decrease is mostly in single crop grounds such as farms that grow corn. So far we've only bought an irrigated farmland that can grow rotations of multiple crops on the land and so we're confident that our farms are insulated from most of the price and rental volatility that you're hearing coming out. And Lewis on that Colorado farm, how many well do we have?

We have 85 wells there.

85 wells, I forgot how many there were on that farm. So lots of ability to keep those organic farms irrigated and growing potatoes, it's really unpredictable the nature of grain prices and other commodity crops that will prevent us from ever waiting our farmland portfolio to have [indiscernible] corn and commodity crops. Currently less than 10% of the total value of our portfolio farms is invested in farmland growing corn towards the end and we believe in the good mix but at this point the farming cycle, we just can't make much money when corn prices are as low as they are today. Ultimately, we believe that farmland in the GMO free and growing healthier crops such as fruits and vegetables and nuts those crops in the lands they are grown on are going to outperform the overall farmland market in terms of both cash returns and long term value appreciation. As farm land real estate company, it's our responsibility to be on top of these markets. We take pride in having built the foundation of our company across the healthiest sector of agriculture and we believe it's one of the company's core strengths. In terms of economic outlook and in general farmland continues to perform extremely well when compared to other asset classes. There's a group called [indiscernible] that keeps a farmland index which is currently made up of 665 agricultural properties is worth about $7 billion in today's terms. And had a total annual return of 10.4% in 2015 and an average annual return of 14.3% over the past 10 years compared with 9.1% for the S&P Index. Farmland has provided investors with a safe haven during recent turbulence in the financial market places, both land prices and food prices especially fresh produce have continue to rise…

[Operator Instructions]. And our first question comes from the line of Rob Stevenson with Janney. Your line is now open.

This is Venkat for Rob. You had touched on this during your opening remarks, regarding the issuance of the OP units in the quarter. Do you’ve any sense that sellers are more willing to take over OP units today?

Well it's hard to say. Some of them do need a substantial amount of cash because they do have loans on the properties and that makes it difficult for them as in the transaction we had. So they ended up taking part of it in OP units and I think that's probably more likely than people taking 100% and OP units, although we do have one group that's interested in 100% of OP units. So Venkat I think this is just one of those things that every deal is going to be different.

And how many additional irrigation projects do you have in process or expect to start during the year and can you discuss the costs involved?

We had one that we completed during the quarter and just under a $1 million, we’re a getting a 5.4% return on bad debt began in February. We had two that were completed subsequent to quarter end, we will begin earning rent on those in April. We've spent overall just over a $1 million, I think the return on that is about 24% to $232,000 between the two of them and the other main project we have going on right now is the almond orchid development in California that will be completed the summer.

We don't really have a lot and every time we do a transaction we look at it from two perspectives, obviously we look at it to see that the existing orders there but also some of these farms can be enhanced by drilling one or two wells and in some cases you put in a lot of wells because the water is there and you want to make sure that you have water in case there's a drought.

And our next question comes from the line of John Roberts with Hilliard Lyons. Your line is now open.

On your capital structure, any thoughts on potential for equity issuance etcetera to increase your capacity for purchases?

Well these OP units obviously are equity. I like to do those because generally speaking we can get a little higher price than the current market price because of the huge tax savings that these farmers get from selling a farm that way. But if anything we would probably look to doing some preferred stock issuance if that's available to us. We would just have to see what the market looks like, right now we have enough for this quarter that we're in and if we - every time we do an OP unit you have to think about that, that's an equity offering and let's say you bought a $1 million farm for OP units we can go finance 60% of that, so that gives us another 60% to go out and buy more farms with. So it's give and take kind of situation of - do you need to raise equity? If not you're probably going to use cash, if you need to raise equity it would nice to do it with OP units as a last resort we'd probably use preferred stock today because I think the stock price has just significantly too low compared to what we've got going.

You talked about that you've got a number of properties under letter of intent or due diligence at this point, can you give us any thought as the amount that you’re looking at and the amount that might be closed?

It's about 12 farms but how many dollars? I'm sorry.

It's about $12 million we have one farm in Florida and one in Colorado throughout $12.1 million total.

But those are relatively firm compared to the backlog of things that we see.

Our next question comes from the line of John Massocca with Ladenburg Thalmann. Your line is now open.

So just quick kind of clarifying question, the lease that was renewed that’s Espinosa Road, correct?

No that was Macintosh, Espinosa is the only lease we have due in 2016 so we’re finalizing the negotiations right now with them.

And could we, I mean with Espinosa are you expecting kind of ramp up similar to what you have got with Macintosh or?

We expect it to be in the range, yes.

And then testing in the same thing it's long way out over year but your 2017 expirations did those also look good for kind of rental double digit, rent bumps on renewal particularly the Oxnard properties?

Yes we haven't really started on that yet, Oxnard is late 2017 in the summer and fall. Oxnard is the one that we're thinking about right now to work on we're just gathering data in order to get that going. So it's a little early for us to be pushing and our farmers don't like to be too far out. They always hope that something will give them a better deal but right now everything is working in our favor.

And then the California property you acquired subsequent to quarter end. Are those yields that kind of when you take into effect the profit sharing, those 7% to 11% yields is that typical of kind of a profit sharing arrangement on the farm?

No typical in that business because you're dependent on whatever revenue comes out and obviously it can be high or low, it can be high because of huge production and it can be low because of pricing. So there's no way of knowing, we just take a chance there, we thought a 5% base was a good and that we get some extra during the year. Hard to know at this point in time and we look at it and say what would it be over say the last five years and that's how we kind of estimate the 5%, the 7% to 17% or 12%. So it's really hard to know and the problem is we won't know until 2017 because all of the paperwork won't have been done and things been sold. As you can imagine when you get into the nut business they don't have to sell immediately as you do in strawberries or fresh vegetables they can actually store them for some period of time and then sell them later. So it's hard to know at this point in time. And almond prices for example we do have the almond area have gone up and down pretty dramatically in the last few years simply because so much was sold to China, not as much in terms of pistachio so we don't see the volatility there. It's a different crop decision because you've got permanent crops and permanent crops obviously you’ve made a bad 10 to 15 years is sort of a minimum that you're going to dedicate the property to simply because you don't pull up the trees and plant something else that easily. So it's a different economics, I like it on one regard because every year the trees will give you, vines or bushes, we’re in blueberry bushes as well. They will give you a crop and you haven't had to put any money in the ground, you got to take care of the plants a little bit but you haven't - don't have the same planting that you do in the crops like corn or in strawberries or any of the vegetables. So it's just a different business and hard to know what we think that's the way to go when it comes to permanent crops.

And are you seeing any more opportunities for acquisitions like the one in California?

There are farms every day that we see, there's a lot of activity in the farming world these days mainly because many of the farmers are I think the average age is 58 and they are starting to look for some way to get liquid simply because two things, one, many of the children don't want to be in the business. So they don't have a successor. And the second side of it is even if you do have to or want to be in the business the difficulty is that transferring that to the children [ph] is a huge tax event and that's the way we think the up REIT units or OP units are going to be one of our big use and we’re going to be able to use that a lot in our transactions going forward.

And I'm not showing any further questions at this time. I would like to turn the call back over to David Gladstone for any closing remarks.

Well thank you for calling in. And again we will see you next quarter and hopefully have some good numbers for you again. That’s the end of this conference call.

Ladies and gentlemen thank you for your participation in today's conference. This does conclude today's program. You may now disconnect. Everyone have a great day.