this reit is ready to contribute to feeding the ever-increasing population - carbon dioxide absorbent
Originally registered in California in 1997, and then in Gladstone, Maryland in 2011 (LAND)
It is an externally managed agricultural REIT that focuses on producing owning farms that are critical to feeding our growing population.
The land has 73 farms, covering a total of 61,794 acres, spanning nine states: California, Oregon, Michigan, Florida, Arizona, Colorado, NEAs, North Carolina, and Washington, all
Net lease agreement.
Land is part of the Gladstone tree of a company including Gladstone Investment (GAIN)
Gladstone Commercial Company (GOOD)
Gladstone Capital (GLAD).
Land is not the grower or farmer of the land it owns.
Under this management tree, land is given unimaginable expertise and experience by a management team that understands what a strong portfolio is made up of and how to operate efficiently
In this article, I will introduce why there is a problem with the growing population of the United States and the world, producing enough food to feed everyone.
In addition, I will explain how Gladstone land can take advantage of this trend and do my part to feed everyone by preserving and owning high-quality land for the crops needed to grow.
Before delving into how world population growth has become a major issue because of demand growth and reduced supply, let me talk about the operation of the company.
The land is divided into several parts: farmland and farm-related facilities.
The farmland is located in 8 states with a total area of 61,794 acres.
Farm property for rent for less than three timesNet Lease.
These fields are used to grow a variety of crops, including: almonds, pistachios, blueberries, corn, beans, fruit or nut trees or shrubs, grapes or grapes, and grains.
What I want to say is that although this company operates farm land, these are also businessmen.
As businessmen, they do this when they see opportunities to invest in making money.
In the end, when others may develop land for the city or suburb, the land may choose to sell the land.
Usually, when an area is to be developed, the land is sold at a high price.
Deals like this can be used for reinvestment and business expansion for free.
The cash for these transactions can be used to invest in additional properties that the management team considers to be an important area for a firm foothold and is critical to the company's future growth.
In addition, the land is more willing to invest in "high
Because companies are also able to increase rents as the land is added.
For example, California is known for its land value, and by reviewing the chart, you can see that between 2000 and 83%, an acre of California's major coastal farmland has appreciated an astonishing 2016.
Part of the reason is that the land is used to grow valuable crops such as strawberries.
On an acre of land on this land, you will have to come up with nearly $85,000. . .
In addition, all of California's irrigation farmland has increased by 119% over the past 16 years, just an acre.
This is crazy.
As you will learn later, a significant reduction in arable land has led to higher profitability on the most fertile farms, which are usually located in California for the production of fresh produce such as strawberries, at the same time, it has also brought about steady appreciation of value and increase of rent.
The incredible appreciation of California's farmland can prove this.
Next, another part of its operation includes owning a farm.
These facilities include: these facilities are still rented out to tenants under three persons
However, management expects this to play a minimal role in its operations.
Like all investment companies, LAND has a laundry list of requirements that must be met in order to be considered worthwhile.
First of all, land acquisition is high priority
Farmland that produces the above value
Average income and profit.
In addition, the farmland must have sufficient and clean water supply, as well as fertile soil, rich in nutrition.
In addition, in order to grow more, the best weather is crucial, plus the long growing season, the sun is sufficient, the sun is not enoughWind conditions.
Finally, these assets must be located in the mature leasing market, with a prominent agricultural presence and a large number of powerful operators.
As mentioned earlier, there are three layers of landNet Lease (NNN)
Agreement with tenants.
The NNN agreement requires tenants to pay rent, taxes, insurance and any other maintenance costs.
The duration of these NNN agreements is between 5 and 10 years, including an income growth device or an annual escalator.
It becomes better because of the way the agreement is structured, the land uses two different payment structures for the tenant.
These payment structures include: 1.
Fixed cash lease.
Fixed cash rent plus percentage of total farm income. Finally, the company focuses on certain types of crops.
The company's bread and butter are fresh produce and annual crops.
Fresh produce and annual crops grown include raspberry, strawberry, sweet corn, tomato, BlackBerry, cabbage, melon, cantaloupe, celery, lettuce, etc.
In 2013, in order to diversify the crops, the land encouraged the growth of permanent crops, which later became the second focus.
Permanent crops added to the land include crops such as almonds, pistachios and blueberries.
These two focuses mask what it sees as the third focus-grains and other crops that serve as commodity crops.
LAND believes that investment in fresh produce and permanent crops will receive higher returns compared to investment in commodity crops.
This paper is about industry.
Commodity crops are no different from other commodities such as oil, natural gas, gold and silver.
All of this is affected by price fluctuations.
Production of fresh produce and permanent crops will not be affected by this fluctuation.
In addition, as mentioned earlier, these crops generate higher profitability and rental income.
In addition, these crops reduce storage costs, require the government to reduce dependence, and are generally closer to the population of major cities, and the potential for future development of land will increase as society develops.
So far, the company has carried out many extensive activities in 2017.
These activities resulted in the expansion of the portfolio to 11,202 acres, priced at $121. 847 million.
The 14 new properties are expected to increase by $6.
The annual rent is 0. 692 billion.
The price is about 18.
The expected annual rent is twice.
The property acquired by the land quarterly report adds to the company's presence in familiar states such as Florida, Arizona, North Carolina, California and Washington.
Of the 14 properties, 5 are in California and 4 are in Arizona.
Having experienced these value-added transactions, it is clear that the management team believes that the expansion in California and Arizona is critical to the company's future growth vitality.
LAND's comprehensive efforts provide insight into the eyes of the management team and discover where they believe the company should focus on allocating future capital by acquiring the property, continue to develop strategic foothold in key agricultural states.
The world's population is now around seven.
There are 4 billion people.
Of this total, there are more than 0. 326 billion people in the United States.
According to a United Nations report, they expect the world population to reach 9.
7 billion to 2050.
In another report submitted in 2009, the predicted U. S.
The population will reach 0. 439 billion in 2050.
The current population and projected population constitute a major problem, none of which is more important than the increase in demand.
The increase in demand for land investors is only half the problem.
The other half is that the number of land that can actually be used as farmland is decreasing.
As you can imagine, this brings about unimaginable problems.
Moreover, it left several great dilemmas for the society.
As shown above, "per capita cultivated land in the world" has steadily declined from about 1 in Mu.
In 1960, the per capita arable land was about 2 mu.
8 from 1980 to about 0. 6 in 2000.
It is expected that the per capita arable land area will drop to about 0 mu in 2030. 5.
See the expectation of 0.
The per capita arable land area has actually become a reality, which is devastating to the world's society and agricultural production.
From 1960 to an estimated 2030 results, a sharp decrease in arable land would be equivalent to an astonishing 58. 3% decrease.
In addition, if available food supplies continue to decline or maintain their level, while demand will only increase, people will fight for food.
This can lead to a series of results such as soaring food prices and even war.
Think about it, if supply decreases or remains the same and demand only increases due to population growth, food prices will be forced to rise because food will be scarce, no matter who is willing to pay the biggest price for it, food prices will rise.
To avoid this, a report by Don Hofstrand, professor of honorary retirement and agricultural economics at Iowa State University cited a claim by the Food and Agriculture Organization of the United Nations (FAO)
It is expected that "food and feed production will need to increase by 70% by 2050 to meet the world's food needs.
"In order to meet the needs of the world, several things must be done: increasing the number of farmland and increasing production.
Fortunately, the land is able to contribute to both options and do its part to ensure that people get food.
First of all, land can have more and more land and can grow the important crops needed for the future.
Secondly, the company is able to purchase and own property rich in nutrients, which is part of its investment paper and is part of the paper in states with a perfect production environment.
In addition, the company can implement strict sustainable agricultural technology, for example: soon, I want to speak out to my high school environmental science AP class because it taught me this.
In fact, these practices have increased and maintained the fertile level of the soil.
Therefore, the introduction and/or further enforcement of land and the inclusion of these practices on its land will ensure that its farmland produces the highest possible yield at all times.
In addition, planting covered crops and agro-forestry will be a good addition to pollution control, helping to absorb excess carbon dioxide in the atmosphere and further improve the environment.
According to North Carolina, a tree can absorb up to 48 pounds of carbon dioxide per year, and when it reaches 40, it absorbs up to 1 ton of carbon dioxide.
In addition, the approximation of "50-year-
The old oak forest will hold 30,000 pounds of carbon dioxide per acre.
Fahey, professor of ecology, Department of Natural Resources, Cornell University.
He also claimed in an article in The New York Times that forests emit about 22,000 pounds of oxygen.
Now imagine, on a larger scale, incorporating trees into it, not necessarily oak trees, but it gives you a concept of the changes that trees can bring.
Incorporating trees into their property can increase biodiversity, which is important for planting crops and also helps to improve and protect soil quality, thereby increasing harvest yields.
This effect will allow land to increase rent as tenants become more profitable.
This idea of helping the environment is a major issue around the ability to grow crops.
This is because the warming of the Earth reduces where many crops can grow, because the ground becomes dry or sunny, or is not in an area where water is easily accessible.
Solutions in this area include the adoption and development of renewable energy and investment in the industry by including it in the home, work, etc.
, Or through the stock market of companies like Nexus Energy Partners (NEP)
, The person I wrote and worshipped, or the energy of the pattern (PEGI)
I also write and love who through other green technologies and managing their footprint.
All of these factors are critical to the overall productivity of the farmland and its ability to provide a sufficient amount of food to meet the needs of the growing population.
As a result, acquisitions are necessary as the population continues to increase and the fertile land available decreases.
The accumulation of property with increasing rents due to the increasing shortage of land will accelerate the growth of the company.
Land went public in 2013 and since then its portfolio has been expanding.
At the time of the IPO, the company had a portfolio of less than 10,000 acres, with a market value of about $50 million.
Since then, the portfolio of land has expanded to 61,794 square meters, with a market value of nearly $0. 55 billion.
All of this was done at a cost of $0. 45 billion.
Land investor's current land past growth is critical to the future of the company, as current assets provide the basis for growth in income and cash flow.
In turn, the growth of these indicators will provide the opportunity to purchase more properties, increasing the foothold that has already represented the state as well as the following states
In addition, the land already owned has the option to use the land to fund more expansion.
The expansion of its portfolio can make a difference in more than one way: producing food, and helping the environment by cleaning the air.
The expansion of the current portfolio and its portfolio can be called "environmental friendly assets" because it contains the above methods, such as agro-forestry and covering crops, which can help capture carbon dioxide from the atmosphere.
Doing so will not only serve the company, but also everyone, as other growers can benefit from cleaner air, and civilians can also breathe cleaner air and other social-oriented
Yes, I understand the size and scale required to make a major change, but making a change causes a "domino effect ".
Overall, this is directly related to the idea of having more farmland, including sustainable agricultural practices, to maximize harvest production and to help the environment.
For the development of the company, it is necessary to prove that the additional assets and income purchased are added value.
If there is no value-added acquisition, after all the purpose of accumulating assets is to expand the scale, the money spent on assets will be a waste.
One way to determine whether a new asset is added is to look at the proceeds.
When looking at earnings, investors want to see a company whose earnings are growing year after year.
The land investor statement above provides data on the company's operating income, operating cash flow, AFFO per share and AFFO per share.
Land is doing well in increasing income and other important indicators.
As you can see, LAND's operating income has grown at a rate of six times a year since its initial public offering in 2013.
0 x, from $5 million to nearly $25 million expected for the 2017 fiscal year.
In addition, the CFO, from negative growth in 2013 to about $9 million in 2016, is expected to reach $10 million this year.
In the end, AFFO also developed very well, growing every year, which also translates into the growth of AFFO per share.
Not only are all these indicators on the rise, but they show that the transactions that have taken place are value-added.
Take a look at the chart above showing how the area is increased and compare it to the indicators in the earnings chart.
Based on this, you can see that it brings more and more revenue as the planting area increases.
All of this shows a sports company that understands how to incorporate new purchases into its network and generate healthy returns.
Investors are very fond of companies with clear finance and operations.
I have previously shown a part of the financial clarity, but I will explain in detail and explain its clear maintenance of operations.
Land investor states terms lease and contract are two terms that investors like to listen to and will never get tired.
This is because the customer/tenant is locked into a legal agreement, thus providing a recurring revenue stream.
This guarantees the continued earnings of investors, with most of the "surprises" from the quarterly and annual celebrations ".
The weighted average remaining lease term for land ownership 6. 2 years.
In fact, it was not until 2020 that it had a large number of leases due for 29 years. 9%. This 29.
The annual income of 9% is about $9 million.
In addition, leases of $2020, 55% or $15 million will expire on or after 2023, which provides sufficient time for the company to accumulate rent and increase revenue.
This reassured investors that stable income would flow in over the long term, increasing not only revenue but also CFO and AFFO.
The growth of these indicators will only enhance the confidence of management in the company and prospects, thus further promoting asset accumulation and dividend growth.
Whenever you talk about asset accumulation, you can't ignore the conversation about debt.
Land debt is strong, only a meager 0.
2% mature this year.
Most of its debt, 64.
About $ 1% or $0. 19 billion will mature at 2023 or more. The other 35.
9% will expire by 2023, most of them 12 years.
$ 4%, less than $50 million, will expire on 2022.
The debt situation of the company is like this, which allows the company to focus on reinvesting most of its capital into the business.
At this stage, a company should not be paralyzed by a large amount of current debt payments, reducing capital reinvested into the business and damaging the future of the business.
Instead, it should focus on reinvesting to ensure that debt payments are paid as little as possible now to ensure that the company is now able to increase its assets and ultimately repay the debt from the operating cash flow.
Second, I think it will enable the company to flourish in the future.
Finally, let's talk about valuation.
There is only one real competitor to Gladstone Land, which is the farmland partner (FPI).
In terms of market value, Farmland Partners is a bigger company than the land, worth $295.
89 million, while the market value of the land is $178. 52 million.
Both companies focus on farmland ownership under triple lease
Net lease agreement.
Just because the FPI is bigger doesn't mean it's a better company, but let's dive into the valuation.
Total PP & E by YChartsLAND (Quarterly)
YChartsIn data in the picture above, you can see the property, factory and equipment PP & E owned by the two companies.
This basically refers to the farmland and other items owned by the company.
You can see that FPI's asset base is almost twice the size of the land.
The value of the land portfolio has steadily increased, some of which can be attributed to its focus on high ownership
The value and quality of California land is very popular.
In addition, the increase in the stable value is also due to the increase in the attribute.
As for the FPI, it goes through a sharp spike every year, with a faster growth in its portfolio.
It's not always a good thing because it sometimes means taking on a lot of debt to fund crazy shopping.
It seems to me that land has taken a more methodical approach, slowly but continuously making value-added acquisitions that are in line with its strategy and plan.
Taking this approach, LAND is able to wait and catch it when the opportunity comes up, and management believes it is consistent with its philosophy.
This makes acquisitions more value-added and provides land with higher quality assets as it can be selective and operate the portfolio based on disciplined investments.
All of this makes it one step ahead of FPI and makes me feel like Gladstone Land is ready to succeed in the future.
Next, the following figure shows the price and cash flow of each company's operating ratio per share, 12 months behind.
This indicator is used to compare how companies value based on the cash flow they can generate from operations.
Price per share to CFO (TTM)
YChartsFarmland Partners have higher multiples of data at the age of 28.
62 times ttm chief financial officer per share, 17 bidradstone land. 86x.
However, due to the negative CFO generated by FPI last quarter, multiples cannot be generated.
For a company, generating negative cash flow from operations tells me a lot about how the company operates and the discipline instilled there.
So at the moment, LAND has been able to grow these metrics as previously said, suggesting that a conservative company is focused on implementing its strategy.
Overall, I found the valuation of this company a bit high and thought it was a multiple of around £ 15. 5-
16 x CFO per share is more reasonable on a ttm basis.
Use these numbers and the CFO of $0 per share.
733, the share price is around $11. 36-11. 72.
The price is $13.
10, which means the shortcomings between 10. 5% and 13. 2%.
Around this I give the company a multiple because although the company managed to develop the portfolio well, it was much slower and I prefer that.
I feel that the stock price is a bit too high at the moment and I will wait for a callback to start holding for a long time.
YChartsIn addition's land data, let's take a look at the performance of the shares of the two companies in the past year.
LAND's stock performed significantly better than its rival FPI's, with a return of 20. 89% vs. -14. 7%.
I think this highlight is due to the market's awareness of who is the power of advantage, which may indicate what will happen in the future.
The market may have found and rewarded land because of its excellent financial position and its slow growth strategy focused on enforcing discipline.
However, the rise in share prices has led to a healthy dividend yield of 4%.
This is much lower than 5.
FPI currently produces 58% sports.
In my book, the yield on land is a bit low because companies of this size are at risk in such an industry.
As I mentioned just now, I feel that the current price of the stock is a bit too high, and it is recommended that the price be adjusted a little more, which will provide investors with higher returns and start a long-term position.
Overall, the yield and low-cost base will provide investors with a good income to wait and watch the great things that happen on Gladstone land.
To put it simply, I want to talk about the risks of the company.
Not all tenants in this industry are of high quality, which means that some may be small companies.
In this case, the arrears of rent need to be taken seriously.
Difficult economic times can also lead to the closure of these companies, or negotiations to reduce rents, reduce income or occupy farmland.
Another significant risk is the inability to invest capital in properties with investment value.
In addition, these companies may face risks associated with today's complex political environment, such as changes in the regulatory environment and taxes.
Like all companies, changes in the overall economy and interest rates can dramatically change the way the company will operate in the future.
Higher debt interest payments are not good for the company because it is operated as REIT and debt is very important for financing.
Finally, as I often talk about pollution, pollution and climate change bring incredible risks to the company for the same reasons mentioned earlier.
Gladstone Land has a strong asset base
Valuation of farmland across the United States.
Through value-added acquisitions, the company is able to achieve asset growth and diversity in terms of location and crop supply.
The company's lease maturity and debt status indicate that the company is a healthy company and that revenue is expected to continue to grow.
In addition, land is able to use the growing population of the United States by providing high-quality farmland, the most needed crops are ripe to help the environment by implementing sustainable agricultural practices, so as to maximize the yield of harvest.
By implementing its strategy for fresh produce and permanent crops and reducing exposure to commodity crops, the company will be the best option to stand the test of time, and ensure that it does its part to ensure food security for the growing population.
Disclosure: I/we have no positions in any of the stocks mentioned and no plans to start any positions in the next 72 hours.
This article was written by myself and expressed my views.
I received no compensation (
In addition to Seeking Alpha).
I have no business relationship with any stock company mentioned in this article.