Farmland Partners Inc (FPI) 2015 Q2 法說會逐字稿

Good day and welcome to the Farmland Partners second-quarter earnings conference call and webcast. (Operator Instructions). Please note, this event is being recorded. I would now like to turn the conference over to Mr. Paul Pittman, President and Chief Executive Officer. Please go ahead.

Thank you very much. Good morning and welcome to Farmland Partners' second-quarter 2015 earnings conference call and webcast. We truly appreciate you taking the time to join us for these calls and look forward to discussing with you our strategy and results. With me this morning is Luca Fabbri, the Company's Chief Financial Officer. I will now turn the call over to Luca for some customary preliminary remarks. Luca?

Thanks, Paul. First and foremost I would like to also welcome you to this conference call and webcast and thank you for joining us today. The press release announcing our second-quarter earnings was distributed yesterday evening.

A replay of this call will be available shortly after the conclusion of the call through August 13, 2015. The numbers to access the replay are provided in the earnings press release.

For those who listen to the rebroadcast of this presentation, we remind you that the remarks made herein are as of today, July 29, 2015, and have not been updated subsequent to this initial earnings call.

During this call we will make forward-looking statements including statements related to the future performance of our portfolio, our identified acquisitions and farm properties under evaluation, impact of acquisitions and financing activities as well as comments on our outlook for our business, [rents] and the broader agricultural market.

We also will discuss certain non-GAAP financial measures including but not limited to FFO, adjusted FFO, EBITDA and adjusted EBITDA. Definitions of these non-GAAP measures as well as reconciliations to the most comparable GAAP measures are included in the Company's press release announcing the second-quarter earnings which is available on our website: www.farmlandpartners.com.

Listeners are cautioned that these statements are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations and we advise listeners to review the risk factors discussed in our press release yesterday after market close and in documents we have filed with or furnished to the SEC.

I would now like to turn the call back to our Executive Chairman, President and CEO, Paul Pittman. Paul?

Thank you, Luca. I want to spend a few minutes sort of talking about the broader context of our business and what we are doing, as well as amplifying the very sound results we are reporting for this quarter and how we continue to improve those results in the coming quarters.

I wanted to start though with the general theme of how proud we are to be a part of the production agriculture industry. I think a lot of people miss the fact that this is one of the leading industries in the United States and a place where the US has the preeminent position on a worldwide basis.

We have the best producers of ag commodities in the world in this country and most of those men and -- and many of those men and women are our tenants. 97% of the acres farmed in the United States are farmed by family farmers. 100% of our tenants are those family farmers.

These medium and large farmers, what we call the top quartile producers who are our tenants, make up 8% of US farmers but are responsible for 60% of the production. To think about the success of this industry and how we as investors participate in it, one farmer in the United States creates the food for 155 people. That number was only 26 in 1960 and only 5 in 1930.

The United States farmer cultivates 12% of the land in the world and producers 35% of the corn and 18% of the other grains that the world consumes on just 12% of the acres.

And now the fact that the industry should be most proud of, 20% of the world population was undernourished in 1990. It is now just 11% and declining every year.

So as we think about those facts in the context of our specific business, land is a residual claimant of return to agriculture. Our business model is the safe, simple way to participate in food production and the global food demand story.

When we think about this particular quarter -- which was frankly outstanding, a $0.16 AFFO per quarter which is 168% year-over-year growth, really showing the powerful impact that scale will start to create in our financial results -- we are right on pace for the $0.58 to $0.62 guidance we had given a month and a half or so ago.

Obviously the analyst models are a little different than what our actual quarterly results are. We are thrilled with the service that the analysts provide to us in the marketplace; however, we are a very new Company and I think there's a little lag in getting to understand exactly how these results come through on a quarter-by-quarter basis.

As I have said many times, the annual results in agriculture are reasonably easy to measure; the quarterly results are slightly more complex. But for the equity analysts on the phone in particular, the $0.16 would have been $0.18 but for two transactions that we would have closed in the last week of June that we had some diligence challenges in those transactions and moved those closings to the first week or two of the third quarter.

So when you work your way through the math, we are basically right on pace prior to the equity offering for the guidance we had given. We will update this guidance in the next month or so for the additional equity we raised. When you think about our execution against the promises we made at the IPO, we have done I believe quite well.

We had around 7,300 acres at the IPO, today we have almost 72,000. We have 123 farms and a diverse number of crops and a diverse number of locations around the United States. We had three states where we owned land at the IPO, now we have 11. We had four tenants at the IPO, now we have 40. And we've made three dividend increases starting with a $0.42 dividend, raising it to $0.464 and then again recently to $0.51.

The market today does not seem to recognize that execution or the underlying fundamentals of our business. There is a deep value opportunity in our Company at the current stock price. The dividend yield is frankly now quite high and we are continuing to see better cap rates in the transactions that we do.

We are trading below NAV and the reasons that I hear when I occasionally talk to investors and other market participants just don't frankly make any sense. Land prices have continued to hold in most if not all markets. Farmer incomes are continuing to be strong. This particular point I think a lot of observers and in fact some people who write in the press are missing any sense of historical context.

You will see headlines that talk about a material decline in farmer income, but what that is saying is that it's a material decline from the highest farmer incomes ever. The recent past is still by historical standards well above average performance for farmers and will continue to be so.

So, any observer with any real context realizes that this is still a very profitable time for farmers which is frankly why you not seeing a lot of pressure on rents.

As far as commodity prices specifically go, what I always tell folks is keep an eye on the demand for the commodities, not on the actual price. Because if we get a change in the underlying demand for these commodities that is an important signal. The day-to-day or month-to-month moves in price is a far less important signal as it relates to land values and rents.

Recently our stock has traded down in the last few days. If you did an index graph compared to corn you would see that somebody thinks that just because corn and soybeans go down our rents are going to go down.

I've said this about 100 times, it's personally frustrating to us; that is not how this industry and this market works. If you see declines in our stock price frankly driven by declines in commodity prices, that's a buying opportunity.

What I believe is going on here is that it's easy to look at these commodity prices but more difficult to look at the actual underlying value of our assets which is the land.

The land is incredibly scarce. There are seldom if ever repeat sales in the lifetime of a given farmer, so the demand for those assets and the pricing of those assets stay strong. As I've said many times, unless you have a sustained downturn in farmer profitability, farmland values will maintain or rise over time.

The other thing that I often hear on this topic when I speak to investors that I wanted to address is that commodity price over the long term does not change very much in real dollar terms. And that is frankly true but not really relevant, because what drives our ability to raise rents over time is not the change in commodity price per se. It is the change in revenue and income from land.

And so, just to give you an example, the average corn yield on a farm -- on the United States farms, average clear across the country was 171 bushels last year. In 1984 it was approximately 108. So you've got a constant increasing production of the corn and you would find a somewhat similar statistic in wheat or soybeans or any of the other major commodities.

So, our perspective is and what drives fundamental profitability for the farmer doesn't take price increase. It takes revenue and net income to increase which is often driven increases in production.

The next thing I just wanted to mention is that we have started to invest in specialty crops. As you probably saw, we've made investments now or about to make investments, we have them under contract in a couple of blueberry farms.

We started with blueberries in particular because we think it's a reasonably safe market. The blueberry demand is growing. It is certainly viewed as sort of a super food in terms of -- from a health perspective.

We specifically went to Michigan because of the major growing regions of blueberries in the United States. It is an area in which you don't have to take a lot of risk on irrigation water and we wanted to tread carefully and go slowly as we entered this market space. Over time you will see us grow the specialty portfolio exposure of our overall portfolio to specialty to around 20% to 30% of our portfolio.

We believe that when we buy specialty crops, meaning we are buying land plus a growing tree or a growing bush, we want to get at a minimum a 200 basis point spread over the traditional ag commodities we do in terms of current return. That's to compensate, frankly, for the additional complexity and risk with those sorts of properties.

We believe that specialty crops blended into our overall portfolio will dampen portfolio volatility and enhance yield. The reason we believe that is that those specialty crops, whether it's blueberries, apples, almonds, grapes, tomatoes, they tend to trade on and oscillate on a different cycle than the commodity crops. So that's why we want to blend some of this into the portfolio.

People often ask me though why don't we do even more than 20% to 30% specialty crops. And the answer is that our view is that we want to create a portfolio of properties that is tied to the global food demand story and not sort of try to chase yield or chase kind of the flavor of the month or the hot new idea which is often the case with some of these specialty crops.

So to sort of amplify that point, this morning we pulled some data about the top five crops and agriculture goods produced in the United States and here they are: number one is corn; number two is cattle and the beef from that cattle; number three is soybeans; number four is milk; number five is chicken. At the end of the day all of those meat goods are fundamentally corn and soybeans as well.

So the crops we invest in really are the drivers of this global food demand and that's where the bulk of our portfolio, given our view of the marketplace, will remain and in our view should remain. Those top five are 60% of the sales of agriculture goods from the United States.

The data -- this kind of data changes gradually over time, although it doesn't change very fast. I think you sort of get my point. So with that I will turn it over to Luca and then we will have questions later on.

Thanks, Paul. The second quarter of 2015 was our strongest to date with an increasing scale of our business fueling in AFFO per share of $0.16 for the quarter. As Paul pointed out already, this is a 168% increase over the same measure in Q2 of 2014. In the second quarter of 2015 we acquired 25 farms in eight states totaling over 19,100 acres.

Following our first transaction including equity consideration in March in the first quarter, in the second quarter we had three transactions comprising 19 farms totaling 17,212 acres in Nebraska, South Carolina, North Carolina and Virginia that were purchased with partial equity consideration consisting of approximately 825,000 shares of common stock and 2.2 million units in our operating partnership.

19.8% of our fully diluted shares outstanding have been issued in conjunction with acquisitions in 2015. In addition to these acquisitions during the second quarter we also entered into contracts for the acquisition of three additional farms totaling approximately 2,600 acres including one in a new state for us, Michigan.

Since the end of the quarter we closed on two of these acquisitions totaling approximately 2,500 acres for an aggregate purchase price of $11.7 million in cash for which we received a closing 100% of the rent due for the 2015 crop year.

During the second quarter we issued in aggregate of $76 million of debt under the Farmer Mac facility comprised of the following: two 10-year interest only bonds at fixed rates of 3.68% and 3.69% totaling $26.1 million; a $41.7 million 5-year interest only bond with a fixed interest rate of 3.2% and an $8.1 million 11-month amortizing loan with an interest rate of one month LIBOR plus 180 basis points.

The overall size of the facility was also increased to $165 million. In addition, on July 1 we issued a $6.6 million 5-year interest only bond with a fixed interest rate of 3.35%.

Using Farmer Mac's leverage ratio calculation we have outstanding debt to assets of 53% as of the end of the quarter. The weighted average maturity of our debt was 3.7 years with most of our bonds under the Farmer Mac facility adding 3-, 5- and 10-year terms.

Most importantly, the weighted average interest rate of our debt was only 2.84%. Considering that the vast majority of our debt is fixed-rate interest only, this average interest rate makes debt a very efficient and attractive source of capital for us.

Now let me turn to our second-quarter 2015 financial results. As I covered some of the key highlights please refer to our earnings press release for more details. For the second quarter we recorded rental income of $2.8 million and net income of $145,000. For the six months ended June 30 we recorded rental income of $4.8 million and a net loss of $52,000.

Actual cash rent receipts for the three and six months ended June 30, 2015 were $6.8 million and [$13.3] million respectively and all of our closed acquisitions are rented. As of June 30, 2015 the Company had $10.2 million in deferred revenue, $6.6 million of which will be recognized during the remainder of the fiscal year ending December 31, 2015.

Like many other REITs we look at certain non-GAAP measures, particularly adjusted funds from operations, or AFFO, as additional measures of our performance. We calculate FFO, funds from operations, consistent with the definition provided by the National Association of Real Estate Investment Trusts.

The key adjustments we make to FFO to arrive at AFFO are to recognize revenue in the calendar year in which the cash rental payment was actually received and to exclude certain non-cash expenses such as stock compensation and certain acquisition-related expenses.

Our AFFO was $1.8 million for the second quarter and $2.1 million for the six months ended June 30. On a fully diluted weighted average basis AFFO per share was $0.16 for the second quarter and $0.21 for the six months ended June 30.

When we calculate per share non-GAAP measures on a fully diluted weighted average basis we include units in our operating partnership, which is our main operating subsidiary, because of their one-to-one parity with our publicly traded shares. On that basis our fully diluted weighted average share count was 10,819,814 for the second quarter and 10,207,414 for the six months ended June 30.

As of June 30, 2015 we had 12,797,030 shares outstanding on a fully diluted basis. Including the equity offering closed earlier this month we currently have 15,797,030 shares outstanding also on a fully diluted basis.

This concludes my remarks on our operating performance for the second quarter of 2015. Thank you for your time this morning and your interest in Farmland Partners. Operator, we would like to begin the question-and-answer session.

(Operator Instructions). Rob Stevenson, Janney.

Good morning, guys. Paul, can you talk about beyond blueberries where -- to get up to that 20% to 30% of the portfolio what the other permanent crops that are most attractive to you given the location, the availability of water, etc., with that? I assume you are still pretty leery about going to California at this point?

Yes, is the short answer to your question about going to California. It is a place we are exercising a lot of caution.

So, to step back just for a second and answer your question though -- and I want to amplify what I said in my prepared remarks. We view specialty crops as an added feature of the portfolio to dampen volatility from the commodity crop side of the portfolio and the potential volatility of farmer incomes that could, but unlikely, but could affect us in rents.

And so, we look at it as from that lens. We don't try to pick the sort of perfect commodity crop. We try to think about how does it fit in the overall portfolio. So, because of that you would see us likely to pursue those crops that we think are relatively low risk and will give us that dampening of volatility.

So, citrus would be reasonably high on our list. Some of the crops grown in California like almonds, grapes, potentially avocados could be high on our list.

The vegetable crops should be a part of what we do because they of course trade on a slightly different cycle than the other specialty crops, although they have in many ways more in common with row crop agriculture from a risk perspective because you don't have a permanent planting like a tree or a bush or a vine. So that's kind of how we think of it.

As it goes to California specifically we are very happy we do not have any assets in California today given the water crisis. That being said, it is a good time to diligence properties in California because those that still have water right now are the ones with the strongest water rights.

And so, we are trying to educate ourselves, but we don't own anything there yet and are, frankly, happy that we don't own anything there at this point. Thanks, Rob.

Okay. And then when you think about the -- you guys have been successful at getting farm owners to take back either units or stock as a significant part of a number of your deals. In your conversations with them are they just looking at it as cash and the same as cash in that they can just take it and liquidate it a week or two later and get the cash back?

Or are they really thinking of it from a tax planning purposes and you are likely to see more of the OP units sticking around as OP units rather than being converted into common shares?

Well, so a couple different questions inside that question, but let me try to take them one at a time. Generally speaking no one we are issuing our equity securities to, whether OP units or common equity is intent on just turning it into cash right away. And here is a couple of reasons.

Number one, it is not their intent. But probably of equal importance, on the OP units you generally speaking under the IRS rules have to hold those for at least a year. So you can't just turn them into cash. And on the common equity that we've issued, you generally would have to hold that as a minimum of six months even with the plane common equity.

So we don't believe that we are giving them the equity that's going to come right back to the market right away. Albeit some of it certainly could over other medium- or long-term. Because these folks are taking these equity securities usually in the context of some kind of broader intergenerational change. As I always say, that's what drives our transactions so there's a lot of estate planning and stuff like that going on.

Now as to whether we issue common equity or OP units, one of the things that always frustrates me when people -- when I go to Yahoo! Finance and I look in our market cap. Our market cap is a lot higher than the numbers publicly reported because -- I don't know why, but we get zero credit, even though it's part of fully diluted shares, for these OP units.

So we are kind of accepting the market the way it is and I think people underestimate the actual scale of our business materially today because the OP units don't show up in the easy to access data sources. And so, we are understating in many public data sources the true market cap of our Company.

I also would like to add, Paul, that if anybody is farmers and sellers of farmland that truly understand our story, sometimes even better than our Wall Street investors.

So, for example anecdotally, as recently as yesterday on a call a potential seller was remarking how having these OP units and shares in our Company would be a great investment for them in the medium- to long-term just because they understand very well the global food demand story and the potential appreciation of farmland.

Okay. And then just last question, when you think about the capital raise, both equity and what you've done on the debt side and what your debt capacity is today, Luca, what is the sort of investable firepower that you are sitting on right now?

Luca, you take that question, Please.

Sure, so we now -- without considered a greenshoot. We have net proceeds from the offering of about $31 million. Consider a 50% LTV conservatively on that, so that puts us at about $62 million. We also have some firepower -- dry powder that we had from previously. So depending on leverage assumptions I would say, and on greenshoot, anywhere between $60 million and $75 million.

Okay. Thanks, guys. Appreciate it.

Dan Altscher, FBR Capital Markets.

Thanks, everyone. Good morning and I thought the quarter looked pretty good. You guys were right on top of our numbers, so glad to see that, good execution once again. Paul, can you maybe discuss a little bit for everyone the choice to go with equity this last go around as maybe opposed to a preferred or a convert or something other -- form of capital?

Yes. Look, I will come right out and say it. I am as disappointed about the execution in our last equity raise as anybody here. All of you know it, but just to reemphasize, I was the biggest single shareholder of the Company, so it didn't feel very good the day we priced that deal.

So to give you a little insight into our thinking, we decided to pull the trigger on that at a stock price of $12.37 basically. Never would have thought we'd end up issuing off of that starting point at $11. But that's where it got to.

We unfortunately do need to continue to grow the size of the portfolio. You are seeing the effect in terms of AFFO this quarter that comes from that growth. And you will see it as we can build out the team and the acreage and the story, this will become a very powerful wealth creating stock both in terms of the long-term appreciation and the dividend.

So, we do feel dedicated to continuing to grow and that's why we decided to make the raise. I will tell you that the market for raising equity in the secondary for small cap stocks is just broken. We've done this twice now and just gotten frankly killed from the standpoint of the trading after we announced the transaction.

You don't want to foreclose any options going forward, but I think we're going to have to find better ways to raise capital than that in the future because it's just not good. So I hope that answers your question. I wish I had a perfect crystal ball and we would raise capital that way, but we seem not to.

Yes, thanks for that, Paul. And I think that maybe just stresses how important -- you guys have done a good job with using the OP units in some cases for the acquisitions, it's clearly in some cases a much more efficient use -- or way to do that.

Related to that also though, and one of the points you made in your prepared remarks, which I think is also accurate, is that the stock is currently trading below NAV. In the past you have referenced estimated NAV. Do you have a sense as to maybe what you think that is now post the equity raise?

What I am going to say is that I've read all of what the analyst community has written on this topic and there's been a couple of analyst reports written since the capital raise. They are roughly accurate and I would like to actually leave it at that.

We may update our perspective on NAV when we get our guidance post capital raise out into the market. But I think I should leave that answer -- I should leave that unanswered in a specific number until that time.

Okay. No, that's fine. I think our last NAV that we did post the raise was around the $12.50 range. So, just for reference purposes for anyone else.

I'm not going to tell you exactly where we think it is because I don't want to do that until we have truly done our math, but you are in the right ballpark.

Sure, got it. Okay. And I guess a little bit more fundamental about the business. We talk a lot about specialty and vegetable crops as opposed to just straight row, which is good to see, we are seeing some diversification there and I get the rationale. I guess ultimately my question though is why now and maybe not initially at the onset from maybe a year, year and half ago?

What has changed now that that's getting broader interest? Is it that there isn't enough kind of high quality row crop left at attractive cap rates that makes sense, or is there something fundamentally shifting in the market that you think now is the time to start executing on that?

No, it's really -- think carefully about what I said in my prepared comments and I will repeat some of that here. We view specialty as a dampener to volatility on the rest of the portfolio, not as an independent huge value creator. I do not believe that having a 100% specialty crop portfolio is a wise investment thesis having done this for now approaching 20 years in thinking about how these markets work.

So our -- because of that view of specialty we are not saying they are bad investments, but we are saying on a risk-adjusted basis we actually like the row crop and I could talk about that for half an hour. But it is a safer bet because of the fundamental scale of that business, the fundamental amount of acres available, how important it is in the global food chain.

If the world runs out of corn, soybeans or beef that's a big problem. If the world runs out of tomatoes nobody really cares. And we want to stay focused on the pieces of this food chain that are the biggest and are most important.

So as we built our portfolio, until we started to get real scale on the more traditional crop side, the logic of blending in doesn't really hold together and that's why you're seeing us do it now.

There are a lot of good opportunities out there in both specialty crop that we will add to the portfolio for the reasons I discussed and in row crop. We are seeing increasing cap rates right now and that's frankly from our perspective a good thing in that we can get some reasonably attractive deals right now and that's great.

Okay. And there's actually just one more that I'll sneak in -- one more question I'll sneak in. If you can maybe just -- maybe qualitatively describe some of the conversations you've had with some of the tenants recently as you've had or are starting to approach some rent rolls, what are you seeing there in terms of terms and conditions of renewing a lease?

Yes, so just to restate a fact I've stated before in some other calls, but for the new listeners so they hear it. We are very fortunate that we don't have really many rent rolls, if any, at the end of this year. Obviously rent rolls at a time when incomes are growing for farmers are easier discussions than when they are modestly contracting as they have in the last couple of years.

So just because of us being a brand-new company the rent rolls we will have this fall are with our original set of tenants which are fundamentally those first couple of tenants that are related parties to me. So it's frankly in easy discussion -- won't have a lot of press push back in terms of those farmers.

The first rent rolls we will have with completely arm's-length kind of negotiation is the fall of 2016 will be the very first set that we will have. That being said, we are not really very worried about this rent roll issue. Our perspective is that we will have -- virtually under any economic scenario we will either have flat or increasing rents in those discussions.

And it comes back to the fact that the farmer takes a long-term view. If you did a graph and you look at grain price and any commodity kind of prices on the food commodities and looked at farmland appreciation and the farmland appreciation and the rents didn't keep up with the grain price increases, they obviously were benefited, but they were nowhere near as dramatic and the same thing is true on the downside.

This is why we always say ignore the underlying commodity price. Think is global demand for the goods still intact? If it is, you are going to gradually drive increasing land values and increasing rents over time with flat rent being your worst-case scenario, not your midpoint.

Got it. Thanks so much for all the comments, Paul.

(Operator Instructions). Dave Rogers, Robert W. Baird.

Good morning, guys. Paul, I wanted to take the specialty crop question maybe in a little different direction. Clearly your expertise had been in row crops. As you move more into specialty do you feel the need to add maybe more expertise in that area? Or does that move into specialty take you maybe graphically more diverse where you see maybe additional pressure on G&A here in the near-term?

Well, we obviously will grow our team. I don't have it at my fingertips, but we are 11 or 12 employees at this point in time where we are a very small team. And you should expect us to continue to be a small team albeit we will make some additions as we expand geography and we expand different types of crops.

Partly just because we need more competent and capable human beings on our team and also frankly, as you said, to supplement the knowledge base of the team we have today, me and others. So we will grow it, but we should be growing AFFO and total portfolio size at a materially faster rate than we are growing in G&A.

I can't promise you that we are not going to have some quarter where that metric doesn't work perfectly, but fundamentally there's a huge amount of operating efficiency and operating leverage in this model. And so, we don't anticipate seeing a big SG&A bump because we add a few people.

Okay. And then with the $60 million or $65 million of capacity that you have post the offering here, how quickly do you think you get that deployed? You said the pipeline looks pretty good. Can you add a little more color around that?

Yes, obviously when you raise capital all of a sudden as a mathematical matter on the new share count it will drive your AFFO per share down. So we do need to and want to get that capital deployed. It's what I refer to as the dead funds problem.

That being said, we try to be selective, we try to look for good deals and put that capital to work in the right way. My sense is we will get that deployed sometime in the next six months maybe, maybe a little longer. But it shouldn't take us very long to gradually put that capital out.

Okay. And I heard you reaffirmed your AFFO guidance for the year. But can you talk a little bit about how the offering and the deployment is going to impact that during the second half on a quarter-to-quarter basis?

Yes, let me restate that because we weren't reaffirming -- I just want to say, we are not reaffirming our guidance. We are not saying it's not good, by the way, but we are a small team and we need to update all of our models post this capital raise with assumptions.

And we will issue some additional guidance. It will probably be several weeks out here, but we will get some new guidance out there with the new share count.

What I was trying to say to people is that if you looked at -- the second quarter is the last quarter we'll ever have without taking account for the new shares we issued. We were tracking, as of the end of the second quarter, more or less right on top of the guidance we had given.

To refresh everybody's memory, that's a $0.58 to $0.62 range. We will have done $0.21 of AFFO at the end of the first half. As I indicated in my prepared remarks, we had two transactions slip into the first couple weeks of the third quarter otherwise it would have been $0.18.

Whether you use $0.16 or $0.18, again thinking about how this models out, you would've had that same $0.16 again in the third quarter and again in the fourth quarter or $0.18, something like that. And in the fourth quarter we received all of that revenue related to crop share.

So, the roughly 10% to 20% of our farms that are some version of a crop share, in other words a participating rent not a direct cash kind of rent of some sort where we are taking a little bit of crop and price risk, all of that revenue comes through the fourth quarter because we don't take any of it until we know it.

So, when you look at $0.16 in the second quarter, $0.16 in the third quarter, another baseline $0.16 in the fourth quarter plus a little bit of extra kick from those crop shares, we were well on the way to hitting that $0.60 midpoint give or take a penny or two.

Obviously having done this capital raise we've got to completely -- we've got to update our model because now you are going to have materially higher share count but also more assets. And that we just -- again, because we try to keep our team kind of lean, we don't have it done as of today but we will get it out in the market as soon as we do it.

Okay. Last question is I think during the quarter you issued some long 10-year bond off the Farmer Mac facility, but there was one that was an 11-month amortizing loan. Was there a rationale for that? Or I didn't hear it if you said it.

No, it was just a way the cap structure on that particular deal worked out and certain things we are trying to accomplish in terms of leverage on any given transaction. We just wanted to drive more equity into that deal in the first year of ownership than -- so it's just a financing structure that was appropriate for one given deal. There's nothing really special there.

Okay, great. Thanks for the color, Paul.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Pittman for closing remarks.

So, thank you all for joining us for this call. I've got one final comment before we drop off. And I was in a farmer's office a few weeks ago and he had this saying on his desk and I asked him for a copy of it. So I just want to read it to you and then if you have any further questions later on feel free to reach out to Luca and I.

But what this saying is is that: My grandfather used to say that once in your life you need a doctor, a lawyer, a policeman and a preacher, but every day three times a day you need a farmer. Thank you very much.

Thank you, Mr. Pittman. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Have a great day.