Company: LANDO
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001495240-25-000012
Chunk: 146

Company: GLADSTONE LAND Corp
Filing Date: 2025-05-12
Form: 10-Q
Item: Part I, Item 2
Chunk 146
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 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 increasing the participation rent components, 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

Inflation

According to the U.S. Bureau of Labor Statistics, the consumer price index (“CPI”) rose at an annual rate of 2.4% through March 31, 2025, continuing the downward trend from the inflation peak in mid-2022.  Food price increases have also slowed but remain elevated, with the overall food category rising at an annual rate of 3.0% over the same period.  Notably, over the past three years, food prices have risen by 14.2%, outpacing the overall CPI increase of 11.2%.  While high input costs remain a concern for farm operators, we believe these costs will be somewhat offset if food prices continue to match or exceed the inflation rate.

Interest Rates

After holding rates steady since July 2023, the Federal Reserve initiated its first rate cut in over four years in September 2024, lowering the benchmark federal funds rate by 50 basis points and signaling a potential shift toward an easing of monetary policy.  However, since that initial cut, the Federal Reserve has held off on further reductions, as stronger-than-anticipated economic data (particularly in the labor and consumer spending sectors), along with growing uncertainty around the duration and impact of newly-imposed tariffs, have renewed inflationary concerns.  As a result, U.S. Treasury yields have remained elevated, with the 10-year Treasury consistently trading above 4.3% in recent months.  Furthermore, despite earlier expectations of multiple rate cuts, the timing and pace of any future easing remains highly uncertain.  The ongoing volatility in the interest rate environment continues to affect the cost of long-term financing, constraining our ability to pursue new farmland acquisitions at favorable terms.

Currently, over 99.9% of our borrowings are at fixed rates, and on a weighted-average