This past week I added about a 1/2 position in the perpetual preferred issue from REIT Gladstone Land (LAND).
Gladstone Land 6% perpetual preferred (LANDO) differs from almost all other income issues that the various Gladstone companies have sold in the past in that it is a pure perpetual. Typically they have sold either ‘term’ preferreds (preferred with firm redemption dates) or they have sold short maturity baby bonds. To date only Gladstone Commercial (GOOD), another REIT, has used perpetual preferreds.
This issue was originally sold starting in 1/2018 by Gladstone Land in an continuous untraded offering, which was completed in 10/2020 at which time the shares were listed for exchange trading.
Now trading at $24.82 the issue provides up a current yield of just over 6%.
Net income of Gladstone Land is not impressive, but being a REIT we can focus on funds from operations (FFO) which is relatively solid.
We had held the term preferred LANDP which carries a 6.375% coupon but has a mandatory redemption date on 9/30/2021 which gives it a current yield of 6.06%–but a terrible yield to worst of around -5%. Trading at $26.30 right now, even if held to maturity, an investor can only look forward to earning 30 cents in the next 9.5 months. We have sold all of our LANDP.
Lastly we always like the monthly dividend payments that Gladstone companies tend to pay–I always say–“better in my pocket than their pocket”
Are lando dividends considered as 199a income?
100% 199a.
Thanks Bob
I was going to dump on the name based on market cap…but I see some of mine shrank to under 1 bill market cap as well!!
I like this issue and am looking at it as long as it is under par. On Friday I bot a small starter position in FPIPB near par. Besides the yield, I like the big 10m common at $8/sh buy-in to the co by new independent director Tom Heneghan- former CEO of ELS and MD of Sam Zell’s trust among other REIT invesments and holdings by Mr. H. He also bot some pfds. Also like the participation feature of the FPIPB pfd
After a strong year for me achieving well over my hoped-for-in retirement goal of 6-8%, I am nibbling to deploy my mostly cash portfolio here and there and LANDO may fit the bill under par for the 6% (along w a lot of foreign holdings in HK, AUS and CA.)
W/my new name as a “jawa” on SA, gotta love the symbol LANDO too! lol. Best to all-
gotta smile out of me Bea
Don’t forget that while LANDO is the Series B preferred that “was originally sold starting in 1/2018 by Gladstone Land in a continuous untraded offering which was completed in 10/2020,” it has been replaced in their corporate structure with Ser C as LAND”s continuously offered at the market untraded preferred. Ser C has essentially identical terms as LANDO. Doesn’t that imply there’s probably somewhat of a lid on price appreciation with LAND continuing to sell 6% preferreds at the market even if not LANDO, Ser B? I’m in on LANDO also..
2wr–yes with the non stop offerings there is likely a lid–but I am happy if it is flat forever with a 6% divie.
Tim – I only threw that in because I thought it might be a beneficial part of the summary for those who might not have been following this issue closely. And as far as being happy forever with a 6% divvy, well in this year of an over 100 basis point swing in the 10 Year Treasury from 1.92% on 12/31/19 to today’s current .95%, I’m thinking quoting a former Nobel prize winner in literature, one Mr. R. Zimmerman, might be appropriate – “tomorrow is a long time” lol… I think my timeframe on how long I’ll be happy with LANDO’s 6% divvy would be limited to however long it might take for a 50 basis point upward swing in Treas. to occur. Who knows? Maybe that is forever in my remaining lifespan….
LANDO is publicly traded and has ample liquidity. Normally, I’d say that’s worth at least 50 bps versus an illiquid. It’s not uncommon to see a 100+ bps spread between an illiquid and an equivalent liquid issue (see ATT listed BBs vs. KTBA). That said, Series C also has the 23.50 put which is worth something. Hard call but I’d say LANDO is still worth a premium over Series C.
Absent the Series C ATM, LANDO is probably worth 26+. They issued LANDO at 6% at about the same time BAC issued BAC-B at 6% and assuming LANDO was fair market priced at IPO, then it should be worth a lot more just like BAC-B.
Good info, LI – Do you know whether or not Ser C also has the put?
I thought I saw Gridbird say that Series C has the put but I haven’t looked myself.
Large holding here too. Bought some under 24 thanks to comments here. Watched the rise and added a little more on each pullback,
Thanks Tim.
Will nibble on Monday.
Lando is my most overweight preferred position. Like the company, management (even though external), and business model.
Anyone know if Glandstone has sold or developed property for industrial or residential use? Potlatch was famous for this, part of why I think WY converted to a REIT and bought them.
From SA
Gladstone Land (LAND +3.6%) has acquired 368 acres of farmland located in Ventura County, California, for ~$20.8M.
Comment on the article
Over $56K per acre ?
Well since in Calif, depending on the crops, you can harvest at least 3 times a year on produce with intensive farming. Also Avocados and Lemons grow in that area. With prime land in Napa selling for 270,000.00 to 350,000.00 a acre and you only get one crop from that.
Gladstone Land is a little different from Farmland Partners. Land invests in fruit, nut and veggie land in California and Florida (among others) while FPI focuses more on small grains in the Midwest. I like the concepts for both but am still a little unclear on how much both depend on regularly selling appreciated land to fund dividends and whether those sales are replenished. This year the rise in small grain prices should translate to higher land values. Normally, one would expect the returns from “truck farming” to support higher operating returns than for small grains.
Charles. Listen to this interview with David Gladstone to get a pretty transparent idea of Land. https://lnns.co/l-AzInMwUaW