Good day ladies and gentlemen, and welcome to the Gladstone Land Corporation Third Quarter 2016 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 follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to conference call over to David Gladstone. Please go ahead sir.

All right. Thank you, Abergele for the nice introduction. This is David Gladstone, and welcome to the quarterly conference call for Gladstone Land. We thank all of you for calling in today; we appreciate your ability to listen to our presentation, and I always enjoy talking to you on the phone, and hope we have some good questions at the end of the day. Perhaps we should have mid-quarter calls, and do a little extra to give you an update but we haven't decided to do that. So hopefully we have a lot of good questions at the end of this, and we can fill you in on things that you may not have heard us cover during this presentation. Feel free that when you're in the Washington DC area, we're located in a nearby suburb, so stop by and say hello, and you'll see some of the great team that we have working here; we have over 60 people now. We have in excess of $2 billion in assets across all of our public companies. And so we will start with Michael LiCalsi. Michael is the General Counsel and Secretary; he also serves as the President of Gladstone Administration, which is the administrator for all the Gladstone funds. So Michael, you are up.

Good morning, everyone. Our report today may include forward-looking statements within the meaning of the Securities Act of 1933, and Securities Exchange Act of 1934, including those with regard to the Company's future performance. Now 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 Risk Factors listed in our forms 10-K and 10-Q that we file with the SEC, and those all can be found on our website gladstoneland.com and on the SEC's website at 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, we will discuss Funds from Operations or FFO. The 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 has endorsed FFO as one of the non-GAAP accounting standards that can be used in discussing REITs. We may also discuss two other FFO measures, one core FFO or CFFO, which adjusts FFO for certain non-recurring charges such as acquisition-related costs. And two, 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 to stay up-to-date on the latest news involving Gladstone Land and our other affiliated public funds, please follow us on Twitter; username GladstoneComps and on Facebook, keywords, The Gladstone Companies; and please also go to our general website to see more information about this company and our other affiliated publicly traded funds at www.gladstone.com. Now today's reports from our President and CFO will be an overview of our operations and performance. So we encourage all listeners to read yesterday's press release and Form 10-Q filing, which include a wealth of information for our investors, and you can find them all at our website, www.gladstoneland.com. Now, I will turn the presentation back to David Gladstone.

Okay, Michael, good report. We are ending 2016 on a very strong note. Don't like to give forward-looking statements, but it looks like 2016 will be a great year for us. I would like to give you a brief overview of the nature of our business before we get into the numbers. Our business consists solely of owning high quality farmland and leasing it to top tier farmers. We don't farm any of the land ourselves, and thus don't take any direct risk. However, as you might know, many of the farmers that we will mention in our report rent our farmland and buy crop insurance from the Federal Government that protects them against potential losses. So thanks to the United States taxpayer, many of the farmers who buy the insurance can if their crop fails get back enough money to plant for the next crop year and that helps us too. So thanks here; hats off to the US taxpayer. Farmers who lease our farms too are in the top tier of the largest and best farmers in the growing regions that we are in, and we prefer to keep the same farmer on the property for as long as possible because they tend to know the nuances of operating a particular farm. Our objective is to be the long-term real estate partner for all of our farmers so that they know they have the farm for as a long a term as they want. Most of the farms are located where farmers are able to grow high value annual crops. These are row crops such as berries and vegetables, where our investment focus will continue to be. However, over the past year we've taken advantage of some lowland prices in the Midwest where we have found some excellent…

Good morning, everybody. We'll begin by discussing our balance sheet. During the third quarter, our total assets increased by about $41 million or 15%, mainly due to new farm acquisitions, which were funded primarily with new fixed rate debt and proceeds from the term preferred issuance that David just mentioned. In connection with certain farm acquisitions during the quarter, we acquired an additional $4 million of new long-term borrowings at an expected weighted average effective interest rate of 3.1% and the rates are fixed for the next seven years. Subsequent to quarter end, we obtained an additional $25 million of new long term borrowings at a weighted average interest rate of 3.2% and these rates are fixed for the next ten years. $21 million of these new borrowings were used to pay down our variable rate line of credit. We also amended our credit facility with MetLife, and through the amendment, we expanded the overall size of the facility from 125 million to 200 million and we reduced the interest rate on about $86 million of term borrowings by 19 basis points, which resulted in annual savings of over $163,000. The new rate on our current term note borrowings under the MetLife facility is now 3.16%. That rate is fixed for the next 10 years. In addition, we also have certain properties that were pledged under the facility reappraised and increased the overall loan to value ratio from 58% to 60%. And together these two events resulted in about $28 million of additional borrowing availability for us. From an overall leverage standpoint, when we use the fair value of our portfolios and if we include the term preferred stock in our debt bucket, our loan to value ratio was 58% at September 30, and we are comfortable with this level…

Okay, Lewis. Nice report, good financials coming along, this company just continues to get better and better every quarter, and we continue to execute our growth plan. In the backlog, we selectively invested in over $287 million in new farms and assets since 2013 and we continue to have a good backlog going forward. So we expect to be adding to that figure as our backlog remains very strong. We currently have one property for about $13 million under signed purchase agreement, and we expect to close that – I hope it is later this quarter, and we have over $50 million in farms under signed letters of intent, and we hope to sign up a few more of those soon, and the closing expected in the first quarter really of 2017. We currently have the ability to close on all of these farms without a need for additional capital and some of the purchase will involve some issuance of OP units. However, we still continue our due diligence on these farms and these properties and so as a result there is no guarantee that we will end up closing on them. I have a strong feeling that they are going to close, but nothing we can guarantee. With the increase in the number of bonds we own, comes greater diversification and protection for investors, and we also expect it to point to better earnings as well. As most people know, our fund specializes in farms that grow fresh fruits and vegetables, and we have historically avoided being heavily in farmland that grows traditional commodity crops such as corn and wheat. One reason for this is we believe investing in farmland growing crops that contribute to a healthier lifestyle such as fruits and vegetables, as we have mentioned before the…

Thank you. [Operator Instructions] Our first question come from Rob Stevenson with Janney. Your line is open.

Good morning. This is Venn Caden for Rob. Lewis, you've previously mentioned that we'd start to see stabilization and operating expenses. And I think it's a 159,000 in 2Q and a 160,000 in 3Q. Is that a more normalized figure going forward? I know you had mentioned there are some bad debt in the numbers and some professional fees?

Right. There, I think what we have now is a pretty good run rate for going forward at our current portfolio sits. However, in Q1 and slightly in Q2, we will have slightly higher census due to additional state tax filing fees and the annual shareholder meeting. But for Q4, you should expect a pretty similar run rate.

Okay, thank you. And David, you touched on this during your remarks. Just curious from a policy perspective, you'd mentioned the water of the US rule. Are there any other significant piece of legislation that we should be following which's going to like it significantly affect the factor going forward?

Yes. I don’t know of any other than EPA. They have so many rules and regulations, unfortunately some of those regulations are California regulations and those probably won't change. But there are if they get the right people and the EPA perhaps they can eliminate some of the restrictions on the farmers that especially in the Mid-West and the East Coast. But unfortunately, I think California is all governed by Jerry Brown and the people in the legislature there. So, probably won't be a lot of changes there.

Okay, thank you. That's it for me.

Okay. Next question, please.

Thank you. Our next question comes from John Roberts of Hilliard Lyons. Your line is open.

Good morning, David.

Good morning.

Just wondered, obviously had a very active Q3. I was just wondering if there are any specific reasons for that activity or that it just was it just by accident there are but it happened stance that all those farms can upper one.

You're on to something. It's happen stance. We don’t we would like to close one every month and make it nice and level but unfortunately the world doesn't work that way. And when you're small as we are, every transaction of course has a big impact on where we are going. And so, we are still in that age of needing to get more deals done. And I think you'll see maybe Q4 won't be quite as great as Q1 in 2017 but 2017's Q1 looks like it's going be a whopper but John Lewis could fly it as well. And it's always hard to know. But I think we're onto something now, we've got a good backlog and the funnel is it's not huge but it's big enough to take care of us for the first couple of quarters next quarter, next month, next year.

You think that price is a good pricing or is it just a lot of deals falling into your lap all the ones?

Well, we see a lot of deals and I think we are on the radar screen for all the brokers and even a lot of the farmers. We get calls from farmers who want to sell us their farm and sometimes they want to lease it back and sometimes they have somebody that's going to lease it. But in those situations, it's always a matter of price. Some of the people just can't believe that their farm is not worth a gazillion dollars and it's really hard to negotiate with somebody who starts that with an extremely high price. And we're pretty good at being able to put together information about farms that have sold in the area and even some of the numbers we have from farms that are close to us. And so, we're able to show them that their numbers aren’t realistic and so far they still haven’t those people that we've negotiated with many of them just can't believe that they're going to get what we're offering for it. But ultimately they got to sell. As we've mentioned many times on the phone, most of the farmland in the United States is still owned by independent farmers or people who just own it and are living off the rents. And that's going to change maybe not in my lifetime but over the next 50 years you're going to have some tremendous changes in the farmland area. So, I think at long-term a company like ours even in the next 10 years is going to do extremely well.

Right. Thanks, David.

Okay. Next question?

[Operator Instructions].

Abigail, we need some questions.

And we do have a question from the line of Robert Sinnott with Silver Hill Capital. Your line is open.

Good morning, David.

Good morning.

Hey. Congratulations on another strong quarter. I think your company is terrifically to own land. With just a couple of clicks of a mouse you can buy into very productive farmland yielding a very good return, conservative return. So, thank you for that opportunity.

We aim to please, I'm a large shareholder, so I'm a believer.

I am too. Can you talk to, David, can you talk to the 64,000 I believe bad debt, non-performance I take on some sort of relief. Can you analyze that a little bit more how that happens?

Oh sure, Lewis is, sure that many times Lewis Parrish talk about.

Those are lease on one of our fold of properties that in just wanted to retire early. So, we let him out of the lease about two years early. It was the $54,000 was just differed rent asset that it built up on the books. So, we in connection with the early termination we had to write that off. I think we had about $20,000 more of the total differed rent asset was $84,000, 64 was written off last quarter and about 20 was written off this quarter. Well, we've already released that property to a new tenant. So, there is no vacancy.

Right. How -- in the future how could you avoid a loss like that?

Trying to pick the young farmers, unfortunately they're hard to find and this sell off had finally just worn out and farming. A great farmer understood the land is as good as anybody can and tremendous ability but he was a point in time and just needed to walk away from it. We could have held him to it, made him pay it for the next two years, we could have probably stored it a little bit on that a long-term. And probably could have gotten some money out of him for terminating early. But we just we don’t try to play the game that way. Farmers are a separate group of people in this world and they all remember things that you've done or haven’t done and so we try to make sure that we stay above board with all of our farmers and support them.

Yes. Thanks David and Lewis for the explanation. I'm sure the farmer that you get in there is going to be or will be as productive as the land can be and you'll do fine on it going forward.

Oh, the new farmer's very strong, we've known him for a long time and the land is right in the middle of a good area, so that it would be very reasonable to assume that we could lease it out again should something happen to this fellow.

Okay. Thank you, for your perspective of that. Thanks.

Okay. Abigail, you got anybody else wants to ask the question?

I'm showing no further questions at this time. I'd like to turn the call back to David Gladstone for closing remarks.

Well, shucks. We're disappointed that no more questions have come on board. So, now you've got to wait till next quarter. Thank you, very much. That's the end of this call.

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