Company: LANDO
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0001495240-25-000021
Chunk: 161

Company: GLADSTONE LAND Corp
Filing Date: 2025-08-07
Form: 10-Q
Item: Part I, Item 2
Chunk 161
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 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 2.7% through June 30, 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 11.3%, outpacing the overall CPI increase of 8.9%.  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

The Federal Reserve initiated a brief rate-cutting cycle in September 2024—its first in over four years—lowering the benchmark federal funds rate by a total of 100 basis points before pausing in December 2024.  Since then, stronger-than-anticipated economic data, particularly in the labor market and consumer spending, combined with ongoing uncertainty regarding the scope and impact of newly-imposed tariffs, have reignited inflationary concerns.  As a result, the Federal Reserve has held rates steady, and U.S. Treasury yields have remained elevated, with the 10-year Treasury consistently trading above 4.4% in recent months.  Although earlier expectations called for multiple rate cuts in 2025, the timing and pace of any future monetary easing remain highly uncertain.  Continued volatility in the interest rate environment has sustained upward pressure on long-term financing costs, which may constrain our ability to pursue new farmland acquisitions on 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