Company: LANDO
Filing Date: 2025-11-05
Form Type: 10-Q
Source: 0001495240-25-000028
Chunk: 165

Company: GLADSTONE LAND Corp
Filing Date: 2025-11-05
Form: 10-Q
Item: Part I, Item 2
Chunk 165
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 while we seek to lease all properties under traditional leases that involve a certain level of fixed base rent, with respect to expirations on certain western permanent crop farms, we may decide to continue with an adjusted lease structure that involves a reduced base rent amount (or none) and/or, in certain cases, a cash lease incentive, in exchange for an increased level of participation rents, or we may decide to continue to operate certain of these properties ourselves via third-party management agreements.  Regarding all vacancies and upcoming lease expirations, there can be no assurance that we will be able to renew the existing leases or execute new leases at rental rates favorable to us, if at all, or be able to find replacement tenants, if necessary.

Business Environment

Impact of Inflation, Interest Rates, and Tariffs and Trade

Inflation

According to the U.S. Bureau of Labor Statistics, the consumer price index (“CPI”) rose at an annual rate of 3.0% through September 30, 2025, continuing the downward trend from the inflation peak in mid-2022.  Food price increases have likewise slowed but remain elevated, with the overall food category up by 3.1% over the same period.  Notably, over the past four years, food prices have risen by 21.6%, outpacing the overall CPI increase of 18.4%.  In addition, the U.S. Department of Agriculture’s August 2025 Land Values Summary reported that nationwide farm real estate values increased 4.3% year-over-year, while cropland values rose 4.7%.  These data suggest that farmland values continue to appreciate, though at a more moderate pace than in prior years, with inflationary pressures continuing to be reflected in land valuations.  While elevated input costs remain a concern for farm operators, we believe these costs are being partially mitigated as long as food prices continue to match or exceed the broader inflation rate.

Interest Rates

The Federal Reserve (the “Fed”) recently resumed monetary easing, lowering the target range for the federal funds rate by 25 basis points in each of September and October 2025, bringing the range to 3.75% to 4.00%.  These actions marked the first sustained rate-cutting phase since 2024 and reflected the Fed’s effort to support slowing economic growth while maintaining flexibility in response to persistent inflation pressures.  Benchmark yields have declined modestly in response, with the 10-year U.S. Treasury yield recently