Farmland Partners (NYSE:FPI) reported higher adjusted funds from operations per share in the second quarter of 2026 and modestly raised the low end of its full-year AFFO outlook, while management said it continues to evaluate non-core asset sales and remains cautious about agricultural lease renewals amid pressure on farm-sector finances.
Executive Chairman Paul Pittman characterized the period as “a pretty good quarter” and “a very mundane quarter,” saying portfolio operations performed largely as expected without significant surprises.
For the first six months of 2026, net income available to common shareholders totaled $3.8 million, or $0.08 per share, versus $9.9 million, or $0.18 per share, in the comparable 2025 period. AFFO increased to $3.8 million, or $0.09 per weighted-average share, from $3.6 million, or $0.08 per share.
Revenue Mix and Expense Changes
CFO Susan Landi said revenue benefited from higher interest income tied to higher average balances in the FPI loan program and financing receivables, increased amortization of points, and higher oil and gas royalty proceeds.
Those gains were partly offset by lower rental income following property dispositions in the prior year. Operating expenses declined year over year, reflecting the impact of prior asset sales as well as reductions in general and administrative costs, legal fees and property impairment charges. The company also recorded a higher provision for credit losses related to FPI loan program receivables.
Landi said the decline in net income and earnings per share was driven primarily by lower gains on asset dispositions, as the company completed fewer property sales during 2026 than it did in the prior year.
During the quarter, Farmland Partners sold an Illinois farm to a solar developer. President and CEO Luca Fabbri said the buyer placed greater value on the property because of its solar-development potential than its agricultural value, enabling the company to recognize a strong gain. Landi said the property disposition produced a $3.6 million gain.
Updated 2026 Outlook
Farmland Partners raised the lower end of its 2026 AFFO forecast. The company now expects AFFO of $13.5 million to $15.3 million, or $0.31 to $0.35 per share. The low end increased from the company’s prior outlook, while the high end was unchanged.
The revised outlook includes higher expectations for variable lease payments. Fabbri said the improvement was primarily tied to almonds, where visibility into yields and pricing improved as the year progressed.
Management also cited higher credit-loss provisions on loans receivable and increased impairment associated with updated market valuations for a West Coast property. The $3.6 million gain on the Illinois property sale partly offset those costs.
Direct operating income expectations for citrus and avocado properties were somewhat softer, according to Landi, reflecting a weaker citrus market and lower yields caused in part by California weather events.
Loan Reserves and Capital Position
Pittman said the company is gradually building reserves against potential credit losses even though management believes it will ultimately collect all outstanding loans. He described the FPI loan program as a higher-risk business that lends to borrowers in distress, often at interest rates of 15% to 20%.
The loan program totaled slightly more than $60 million, Pittman said. The bulk of the current reserve build relates to the same borrower the company has previously discussed. He said the company’s concern is that a distressed borrower could lose control of its situation through bankruptcy or another process, which could make collections more complicated despite Farmland Partners’ collateral position.
“So far in our loan program, we’ve been doing this now a dozen years, we haven’t had anybody not pay us,” Pittman said.
At the end of the second quarter, Farmland Partners had approximately $122 million of undrawn capacity on its credit lines. The company repaid $8 million during the quarter and made no new borrowings. One MetLife loan reset during the period and another was extended for a year, reducing the average rate on those loans to 5.25% from 5.64%.
Pittman said the company could use borrowing to support a disciplined share repurchase program when management considers the stock price sufficiently attractive. However, he said the company generally expects to sell assets to replenish capital over time rather than maintain a negative spread between borrowing costs in the mid-5% range and the stock’s dividend yield.
Leasing and California Strategy
Management said it has not yet aggressively pursued lease renewals for the coming year, citing less-than-ideal financial conditions among tenants. Fabbri said the company has strong tenants and does not expect a materially new problem, but it is waiting for potentially better agricultural-market conditions before accelerating the renewal cycle.
Pittman said the company expects leasing conditions to resemble last year, with rents generally flat or modestly higher. Many leases contain cost-of-living adjustment provisions that can provide increases over time even if rents are not raised materially in renewal negotiations.
The company is continuing to evaluate dispositions of non-core assets, particularly in California. Pittman said California agricultural transaction markets remain challenged, although conditions may be less difficult than they were six months earlier. He cited reduced water availability, state policy and rising farm-labor costs as pressures on California specialty-crop agriculture.
Farmland Partners remains “long-term bearish” on California, Pittman said, and intends to gradually reduce its exposure there. Proceeds could be used for stock repurchases or reinvestment in the company’s core Midwestern markets.
About Farmland Partners (NYSE:FPI)
Farmland Partners Inc is a real estate investment trust (REIT) that acquires and manages high-quality farmland in the United States. The company’s primary business activity is the ownership of agricultural land, which it leases to farmers under various rental arrangements designed to generate stable cash rents and long-term capital appreciation. By focusing on farmland as a real asset, the company seeks to benefit from rising global demand for food, fiber and renewable fuels.
Founded in 2013 and headquartered in Scottsdale, Arizona, Farmland Partners completed its initial public offering in June 2017 and began trading on the New York Stock Exchange under the ticker FPI.
