Gladstone Land and Gladstone Investment Announce Earnings

Ag land REIT Gladstone Land (LAND) has announced earnings. The company has certainly been acquiring plenty of new farms in the last year. The company appears to be essentially covering their common stock dividend–but that is all I would expect.

LAND has a 6.375% term preferred outstanding of which I hold in a couple accounts. It trades up near $26 and is now callable. Obviously since it is trading at a fairly large premium I don’t think it will be called–but may have to rethink it having a full position–don’t want to be called a snoozer.

The LAND press release is here.

Business development company Gladstone Investment (GAIN) announced earnings. The company has covered their common share dividend and held net asset value fairly steady

GAIN has 2 outstanding term preferreds and we own the GAINL 6.375% term preferred.

The GAIN press release is here.

14 thoughts on “Gladstone Land and Gladstone Investment Announce Earnings”

  1. Tim,
    At what price you estimate CNLPL and AILLL should be sold to avoid “snoozing” on them?
    Today, CNLPL is @ $58.50 (5.54%) and
    AILLL is @ $27.21 (6.09%)

    These are not proper “snoozing” candidates, in my understanding, as they can’t be called, right? But with the rise in rates, can’t they suffer a significant drop? e.g. a 1% increase in yield, to 7% for AILLL would bring it below $24, and for CNLPL a 1% increase would bring it below $50, correct?

    Thx!

    D

    1. Hi dan–they can be called–anytime. The best thing these have going for them in redemption respect is that they have been outstanding for a very long time–and they are very small issues–tiny. The CNLPL issue has been outstanding since 1968 and hasn’t been called. I hold the CNLPL issue in small amounts–because of the call risk.

      As far as interest rates and falling share prices—you can calculate theoretical falls and rises–but they will trade on sentiment–the need for safety–theory is just an exercise–not a reality.

      1. Thx for the reply!
        So at $58.5, one would lose $ if called before 2022 ( (58.5-51.84)/3.24 ) !!
        I understand: the bet then is that being tiny and not having been called in the past, they might continue not to call it in the next 2 years.

        However, it seems to me that there MUST be a price where it would be absurd (or stupid?) for them not to call it, no?

        I guess I would rather bet that even if not called in the next 2 years, CNLPL could be bot well below today’s $58.5.

        Thx for all your wonderful work here @ III !!!
        I have learned so much from your posts and from a number of very knowledgeable posters. I do not know any other place where the info posted is so reliable!
        D

        1. Dan, these old bastard preferreds are blip. Remember many utes get to pass the cost of these onto the rate payers. So its costing them nothing per se.
          When companies file rate requests many list the cost of capital as one collective series to PSC. And there are other sister preferreds with 4% or less par being mixed in with them. So collectively the cost of capital is deemed prudent by PSC to allow recovery of cost in rates. So its not worth their time on these office soda fund amount preferreds outstanding. Note I am only referring to a select few companies that have these.
          Here is a telling sign. About 5 yrs ago CLP wanted to increase their short term borrowings. However CLP preferreds have a provision that limits amount company can borrow short term. They sent a notice out for approval. 75% approved of waiver. The problem was in total only a bit more than half voted. As management said they couldnt track down enough of existing shareholders to get their approval.
          Well if they wanted to increase the borrowings that badly they could have just sent out a redemption notice and then do it…But they didnt and thus they stayed under their short term limits….But non of this precludes them from serving up a redemption notice today though. Remember though rates have been lower 2 different times this decade and nothing happened. They show no interest in issuing new ones either which may also serve as a buffer.

    2. Dan, theory aside, you cannot extrapolate anything with these because their present yields are already considerably above market yield. The last 7% issued QDI fixed ute preferred was in early 1990s when 10 year was in the 5-6% range or so. If AILLL was uncallable it would be trading over $30 now. So these types of issues get caught trading in non mans land….Above market yield payment all while exposing yourself to a considerable kick in the groin on a redemption notice.

      1. Thx Grid, I guess I do see both AILLL and CLNLP at curent prices with such an unwanted (and a painful kick with too much regrets if happens) risk. May reconsider these only at significant lower prices.

        1. dan, I first knew about AILLL, CNLPL & CNTHP about 3 years ago when Grid mentioned them in another forum.

          At that time, the call risk was probably just as high as now. I took the risk and bought and today have AILLL as my largest single holding at an average cost basis of $26.60. Should it go below $27, I intend to add.

          From time to time, a seller shows up, and large dips occur. You might want to keep an eye out for these. But you have to be comfortable with the call risk, for sure.

  2. Tim, now, I am a guy who stays fairly heavily involved in past call issues through the years and have never got caught with my pants down ever. But, you may start looking at exploiting any price pop and exit.
    Remember they have a considerably bigger direct non trading issue (LANDB) they issue whenever through their brokerage. Its a 6% issue. It isnt out of realm of possibility they build up cash through it to redeem LANDP at some point prior to 2021. At some point the math wont justify keeping it. But they do declare dividends 3 months at a time, so that can be factored in also.

    1. Grid – Imho, LAND’s continuing issuance of 6% preferred B is an argument against the likelihood of them calling the 6 3/8% A series as that spread is too narrow. Having said that, though, you also have the evidence of the other Gladstone names being able to float new issues in the 5 3/8’s area which could be enough to make a call economical. There’s something special about the B series that I’ve never quite fully understood that makes it wonderful in the eyes of LAND’s management, but to me, I suspect they could issue new paper at a cheaper level, so maybe there’s reason to believe LANDP is at risk of call, but not from selling more B’s in my famous last words opinion.

      1. 2WR, I wasnt suggesting it would, just that it could. And remember these LANDB shares based on past readings and filings have shown them never to be issued at $25. They have been privately negotiated also. For example last winter when preferreds dropped they were issuing them at $23.50. So there is nothing that would preclude them from issuing above $25 either…Who knows. That fact they are going this route means most likely there is no call and reissue coming.

      2. Remember, they are issuing these shares through Gladestone brokerage. Hmm, that name sounds familiar, somebody trying to save on fees here.

        1. Yeah but they say something like 94% of the fees of Gladstone Brokerage are passthrough to other brokers who do the actual selling.

          1. Yes, and he says a lot of things, lol. Quite the folksy guy. But he always seems to avoid discussing all his fees he collects off LAND in general. Its amazing all the fees external managed outfits can extract.

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