Company: LANDO
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001495240-25-000012
Chunk: 111

Company: GLADSTONE LAND Corp
Filing Date: 2025-05-12
Form: 10-Q
Item: Part I, Item 8
Chunk 111
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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 basis, these rates are fixed at an effective interest rate of 3.41% for another 3.4 years.  As a result, our existing debt portfolio has been largely insulated from the sharp rise in interest rates over the past couple of years, and we believe we are well-protected against the potential for prolonged elevated interest rates or any future rate increases.

Tariffs

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Ongoing trade tensions and the recent implementation of new tariffs have introduced added uncertainty for many U.S. agricultural exports, including certain crops grown on some of our farms, including almonds and pistachios.  While fresh produce, including berries and most vegetables, is more insulated due to strong domestic consumption, approximately 60%-70% of U.S.-grown almonds and pistachios are exported annually.  As a result, these crops are more vulnerable to shifting trade dynamics and potential retaliatory tariffs.  While the full impact on crop prices and grower economics remains uncertain, we continue to monitor developments closely, as any sustained disruption to export markets could influence lease structures and participation rent levels on the affected farms