FPI

Thank you. I would now like to turn the conference over to Luca Fabbri, President and Chief Executive, please go ahead.

Thank you, Janice. Good morning, everybody, and welcome to Farmland Partners' first quarter 2026 earnings conference call and webcast. We truly appreciate your taking the time to join us for this call because we see them as a very important opportunity to share with you our thinking and our strategy in a format less formal and more interactive than public filings and press releases. I will now turn the call over to our General Counsel, Christine M. Garrison, for some customary preliminary remarks. Christine.

Thank you, Luca, and thank you to everyone on the call. The press release announcing our first quarter earnings was distributed after market close yesterday. The supplemental package has been posted to the investor relations section of our website under the subheader Events and Presentations. For those who listen to the recording of this presentation, we remind you that the remarks made herein are as of today, April 30th, and will not be updated subsequent to this call. During this call, we will make forward-looking statements, including statements related to the future performance of our portfolio, our identified and potential acquisitions and dispositions, impact of acquisitions, dispositions and financing activities, business development opportunities, as well as comments on our outlook for our business rents in the broader agricultural markets.

We'll also discuss certain non-GAAP financial measures, including net operating income, FFO, adjusted FFO, EBITDAre, and Adjusted EBITDAre. 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 first quarter 2026 earnings, which is available on our website, farmlandpartners.com, and is furnished as an exhibit to our current report on Form 8-K, dated April 29th, 2026. 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. We advise listeners to review the risk factors discussed in our press release distributed yesterday and the documents we have filed with or furnished to the SEC.

I would now like to turn the call to our Executive Chairman, Paul Pittman. Paul.

Thank you, Christine. It was all in all a pretty good quarter. I'm just gonna address a couple of issues in my prepared comments, and then I'll turn it over to Luca. The first issue is we've been getting some questions about what's the impact of the war in Iran on fertilizer, grain prices, farmer outlook, et cetera. Let me kind of hit a couple of key issues, and if anybody has follow-ups, we can deal with it in Q&A. The first is on fertilizer. Most of the U.S. fertilizer does not come from the Middle East or from the Gulf. Generally, it frankly comes from the U.S. and Canada.

All in all, the U.S. farmer, while prices may be higher for fertilizer, is sort of unaffected from a supply perspective on fertilizer. I think if this went on for another year, it would have some impact, but largely speaking, I haven't heard any reports about a lack of fertilizer. What I have heard is some people changing crop decisions because cost of fertilizer is an issue, which may lead to slightly less corn being produced as opposed to soybeans in particular. That's really kind of on the fertilizer front. We have seen some grain price increases recently, particularly in wheat. The U.S. is not a huge worldwide producer of wheat compared to some other places in the world.

You have seen, wheat is also very fertilizer intensive. You may see less wheat grown or less yield on wheat in other parts of the world because of the limitation on fertilizer production coming out of the Gulf. We've seen some wheat price increases, some corn increases as price increases as well. I think that's at least as much due to drought in the U.S. as it is to the war that's going on in Iran. The drought in the southeastern portion of the U.S., which is a reasonably large wheat producer, is very, very significant. I read this morning it's actually the worst, the worst drought, that may have ever been at this point in the southeast.

That'll lead to, you know, probably lead to somewhat, increases in grain prices. The final question we've been getting is about how all that might impact our next cycle of rent negotiations. The real answer is it's really too early to tell. This doesn't move through the, you know, things like the war in Iran does not move through the farm economy overnight. You know, certainly doesn't move through nearly as quickly as the up and down of the public markets. This is gonna be a kinda slow-moving, process. Higher grain prices obviously, help us in our upcoming rent negotiations, which won't even start for another few months. You know, lower grain prices obviously hurt in those negotiations.

Just to give context, hurt means we're largely flat and have a hard time getting increases. Good times is when we can get, you know, modest increases in rents. The final issue I wanna address before I turn over to Luca is, we did take some additional loan loss reserves, not because we're, you know, directly concerned that we won't collect, but we are obviously making relatively high interest rate, high risk loans, and we just think it's prudent to continue to make some reserves under the eventuality that, you know, we didn't collect everything. Hopefully, those things get reversed, but we put them in our financials.

You know, in an effort to be cautious and conservative, given the risk profile, of our loan program. With that, I'm gonna turn it over to you, Luca, and I'll be back at the Q&A.

Thank you, Paul. This quarter was very much in line with expectations from an operational standpoint. The largest items of note, we actually already addressed in the prior call, which is the completed redemption of our Series A preferred units. They were a significant overhang on the company in case we had to convert them into common at prices that we consider at a significant discount to our intrinsic value. We had prepared for this event for a long time by shoring up our liquidity reserves, and we were able to satisfy our Series A holders in cash. Despite that, we still have a very strong liquidity position. We have access to about $114 million in untapped liquidity on our lines of credit.

We from a balance sheet perspective, our company is very, very strong at this point in time. On the portfolio side, we continue to marginally improve the overall quality of our portfolio. We dispose of another California property, which we consider a region, you know, subject to volatility and to risks, and therefore we welcome the reduction to that kind of exposure. Overall, in the global picture, you know, if you set AI aside, this is a time of great uncertainty and volatility and so on and so forth. In the agricultural sector in particular, there is quite a bit of trepidation about what's going to happen on the cost side, as Paul was outlining.

Overall, farmland as an asset class continues to demonstrate its strength and its resilience, and we remain a very, very strong believer in the quality of the asset class. With that, I will turn the call over to our CFO, Susan Landi, for her overview of the company's financial performance. Susan?

Thank you, Luca. We're gonna cover a few items today, including the summary of the three months ended March 31st, 2026, a review of our capital structure, and updated guidance for 2026. I'll be referring to the supplemental package, which is available in the investor relations section of our website under the subheader Events and Presentations. First, I will share a few financial metrics that appear on page two. For the three months ended March 31st, 2026, net income was $0.6 million, or $0.01 per share available to common stockholders, which was lower than the same period for 2025. AFFO was $2.1 million versus $2.3 million for the same period of 2025, or $0.05 per weighted average share, which was the same as Q1 of 2025.

Page 5 shows a more comprehensive look at the main drivers of the changes year-over-year. On the revenue side, we were positively impacted by higher interest income due to a higher average balance on loans under the FPI Loan Program and financing receivables, an increase in amortization of points, and higher proceeds from oil and gas royalties. These increases were partially offset by lower rental income due to asset dispositions, the absence of auction brokerage and third-party management income due to the sale of MWA in the fourth quarter of 2025. Operating expenses are slightly higher over the prior year due to the increase in the allowance for credit losses related to loans under the FPI Loan Program.

This increase was partially offset by decreases in property operating and depreciation expenses, which are due to asset dispositions and savings on corporate and travel expenses as a result of the sale of MWA. On page 12, there are a few capital structure items to point out. We had undrawn capacity on lines of credit of approximately $114 million at the end of Q1 of 2026. Borrowings during the quarter were primarily used to redeem the remaining Series A preferred units. We had rate resets on three MetLife loans during the quarter. The aggregate amount of these loans was $19.3 million. The weighted average rate on these loans went from about 5.56 to 5.19. The MetLife term loan number seven is scheduled to reprice in June.

Moving on to page 15, you'll see our updated outlook for 2026. The assumptions are listed at the bottom of the page. On the revenue side, changes from the February guidance include management fees and interest income, which is higher due to the amendment and extensions of loans under the FPI loan program. On the expense side, changes from the February guidance include an increase in provision for credit loss allowance due to higher allowance on potential credit losses of loans. The forecasted range of AFFO is $13.2 million-$15.2 million, or $0.30-$0.35 per share, which is a decrease from the prior quarter on both the high and low end of the range. This summarizes where we stand today. We will keep you updated as we progress through the year. This wraps up our comments this morning.

Thank you all for participating. Operator, you can now begin the Q&A session.

At this time, I would like to remind everyone in order to ask question, press star then the one on your telephone keypad. We will pause for just a moment to compile a Q&A roster. Your first question is coming from the line of John Massocca with B. Riley Securities. Please go ahead.

Good morning.

Good morning.

Morning, John.

Let me just kind of Oh,

Go ahead.

Maybe just to clarify on the loan reserve increase, is that being tied to the performance of the borrower? I mean, is there something specific you're seeing there? It just seems like, you know, it seems like it's an older loan, right? It's not a new loan necessarily creating more reserves. Just kind of curious why the change, if it kind of seemed like there wasn't a major change in the outlook for kind of farm valuations.

Yeah. We make loans to a variety of different folks. One of the lenders, one of the borrowers continues to have, you know, sort of some critical challenges in their overall business, and, you know, have, you know, negative news cycle, if you will. While we may feel secure about our specific loans, that negative news cycle always makes us nervous, which is really what's kind of driving the, you know, the reserves. When things get messy for a borrower with other lenders, even though it may not directly affect our collateral position, it just makes the whole, you know, any situation more complicated, and, you know, in a non sort of defined way increases risk. That's what's driving those concerns.

Are those issues caused at all about a certain crop type having headwinds, or is it more just very specific to the borrower themselves?

No, it's very, it's very specific to that borrower. It's not a crop type issue.

Okay. In terms of the size of the outstanding Loan Program, I mean, is any of that kind of maintained size and kind of growing interest income tied to extensions on that with that particular borrower, or is it just kind of more broadly either extensions or new loans within the Program?

Some of the some of the extensions and some of the increased interest rates are related to that buyer or that borrower.

Shifting gears maybe a little bit, has the conflict in the Middle East and maybe some of the uncertainty around prices impacted the disposition market, for transactions to the extent you're still really looking for more kind of sale opportunities within your portfolio, within your non-core portfolio?

No, no. What's going on in the Middle East doesn't have any kind of sort of direct line of sight impact on the transaction market for farmland. What does have an impact is the general economy/general ag economy. You know, we're not in any real different situation than we were before hostilities in Iran started. We were in a somewhat challenging farm economy based on crop price versus cost of operation. That makes farmers less aggressive bidders on properties. As we always talk about, the farmers are the most aggressive bidders and really sort of set the price for properties. This is, again, this is not, you know, you don't have a pendulum here that swings very far.

You know, good times are, okay, 5%, if you're really lucky, 7% or 8% increases in land values on a per annual basis, bad times are, you know, only up 1% or 2%, or maybe flat, or maybe even down 1% or 2%. You know, I think it's just incredibly important to always recognize that we're in a industry with a very slow, steady upward march in asset values due to scarcity and fundamentally due to food demand. Those are not things that, you know, all of us involved in public markets have a hard time grasping this. You know, you just don't get the kind of volatility swings we're used to seeing in asset values or crop price or anything else.

It's very glacial in terms of, you know, with a pretty strong upward trend. It doesn't, it just doesn't move quickly no matter what.

Okay. You talked a little bit about kind of the impact or non-impact of fertilizer prices. Just as someone who's much closer to kind of the farm economy than, you know, most other people on the call, how impactful has the increase in diesel prices been, and is that something that can maybe be even more meaningful for farmers versus fertilizer or something where it's just a relatively small portion of the overall cost of running the farm?

It's a relatively small portion is the answer. A couple of things to grasp here. Number one, most farmers, most farmers of scale do some level of hedging or pre-buying of their diesel fuel. You know, it's quite common for a farmer to have, you know, 10,000 gallons or multiple 10,000 gallon tanks of diesel on their farm. And they probably bought that, you know, sometime last winter, well before the Iranian hostilities began. You know, not a huge impact, but obviously as they look forward on their budgets, you know, they'll run out of that fuel sometime this summer, have to replace it. You know, when they start trucking this fall, you know, diesel will affect trucking costs.

You know, it's certainly not positive for their P&L, but again, it just doesn't come through very quickly because of the amount of kind of pre-bought capacity on diesel. You know, round numbers, diesel might be in the neighborhood of 10% of a farmer's crop budget, maybe a little less, you know. It's just not, it's not a huge impact overall. Probably less impactful than fertilizer cost on the, you know, the corn and wheat crops. Hope that helps.

Yeah. I appreciate all the color. I'll cede the floor. Thank you very much.

There's no other questions in queue at this time. Oh, there's one that just came in. It's coming from the line of Susie Hyde with Raymond James. Please go ahead.

Hey, guys. Sorry, just sneak this one in. Just a quick follow-up on the FPI Loan Program. It looks you have probably somewhere around $30 million coming in later this year. Are there any kind of priorities for capital allocation we should be thinking about, share repurchases, deleveraging the balance sheet a little bit further, extending new loans? Any, any kind of color you can provide would be very helpful. Thank you.

Yeah. I would say that most of that capital when it gets returned to us, is likely to go for continued deleveraging of the balance sheet. You know, I think our stock is still a relative bargain, although not as big a bargain as it has been in times past. You know, you could see us buy stock back depending on stock price, but more likely deleveraging would be my current thinking. Luca or Susan, if you have a point of view on this, feel free to express it, even if it's frankly different than mine.

No. The, as we've discussed, that's our priority right now on capital allocation is frankly delevering. We remain, as Paul mentioned, we remain very, very opportunistic on the stock price in watching it and planning, implementing potential stock repurchases.

Got it. Thank you. That's all I had.

Your next question is coming from the line of John Massocca with B. Riley Securities. Please go ahead.

Yeah. Just a quick follow-up one. Any kind of outlook currently for what you would expect the rate to be on the repricing of the term loan number seven in June?

I'm gonna turn that over to Luca or Susan, if you wanna make a comment there.

At this point, we're expecting it to be fairly in line with what we did with the two that occurred in Q1.

Yeah. I would expect to add on to that, expect the spread to be consistent, Of course your guess on rates is as good as mine.

All right. Does that lock in in June, or is it locking in advance of the actual change?

It locks just before.

Yeah. It will be-

Okay

late May, early June.

Okay, perfect. Thank you very much. That's it for me.

There's no questions in queue at this time. That concludes our Q&A session. I will now turn the conference back over to Luca Fabbri for closing remarks. Please go ahead.

Thanks, Janice. We appreciate your interest in our company and look forward to updating you on our activities and results in the coming quarters. Have a great day, everybody.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Ladies and gentlemen, thank you for standing by. Hello, and welcome to Farmland Partners Inc. Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to our President and CEO, Luca Fabbri. Please go ahead.

Thank you, Dustin. Good morning, everybody, and welcome to Farmland Partners Fourth Quarter and Full Year 2025 Earnings Conference Call and Webcast. We truly appreciate you taking the time to join us for this call because we see them as a very important opportunity to share with you our thinking and our strategy in a format less formal and more interactive than public filings and press releases. I will now turn over the call to our General Counsel, Christine Garrison, for some customary preliminary remarks. Christine?

Thank you, Luca, and thank you to everyone on the call. The press release announcing our fourth quarter earnings was distributed after market closed yesterday. The supplemental package has been posted to the Investor Relations section of our website under the subheader Events and Presentations. For those who listen to the recording of this presentation, we remind you that the remarks made herein are as of today, February 19, 2026, and will not be updated subsequent to this call. During this call, we will make forward-looking statements, including statements related to the future performance of our portfolio, our identified and potential acquisitions and dispositions, impact of acquisitions, dispositions and financing activities, business development opportunities as well as comments on our outlook for our business, rents and the broader agricultural markets. We will also discuss certain non-GAAP financial measures, including net operating income, FFO, adjusted FFO, EBITDAre and adjusted EBITDAre. 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 full year 2025 earnings, which is available on our website, farmlandpartners.com, and is furnished as an exhibit to our current report on Form 8-K dated February 18, 2026. 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 distributed yesterday and in documents we have filed with or furnished to the SEC. I would now like to turn the call to our Executive Chairman, Paul Pittman. Paul?

Thank you, Christine. So it was a very, very good quarter and a very good year for the company. Luca will go through many of these things in detail, but super strong AFFO, very strong asset sale program. We've continued to simplify the business with the sale of Murray Wise. We reduced our debt and our leverage overall, particularly when you consider that we have now paid off the preferred. So Senior claims to common shareholders have been reduced substantially. And now we have increased the dividend by 50%. This is something that's taken us a long time to get here, but it's driven by disciplined cost control and sort of disciplined strategic thinking with regard to what assets to own and what assets not to own. That process is driven at this point largely by Luca and the rest of the management team in Denver. But as you all know, I'm still pretty involved as well. So with that, I'll turn it over to Luca to be a little more specific about the events of the past year.

Thank you, Paul. I will actually pass the ball here to Susan Landi, our CFO, to walk you guys through more specific details about our performance, both in the quarter and the year. So I will stick also to some kind of broader general comments. We had a very, very strong Q4 in the context of a very strong year. I just want to remind everybody that this is kind of as expected. We historically have a very strong seasonality emphasis on Q4, especially on the revenue side because of the nature of some revenue streams that we recognize only when we actually have actual cash receipts. We -- as Paul also mentioned, we had embarked in an effort to really strengthen our balance sheet and our liquidity access, preparing for the repayment of our Series A equity that we just repaid here in February. So we were able to do so as a cash repayment rather than a common stock conversion, which would have been very dilutive. So we are very happy that we were able to strengthen our balance sheet and preserve the value embedded in our stock for our shareholders. We sold our brokerage and auction and asset management subsidiary, MWA, to People's Company, but we continue to have a very close working relationship with the buyer and with our former team over there. So we essentially got a double benefit of simplifying our business and streamlining a little bit while not really losing access truly to the market intelligence that we derived from having that team within our organization. A quick word about the 2026 outlook. It is also very strong. Our approach, especially at the beginning of the year, given the comment that I just made about seasonality, we try to be realistic, but -- and provide the best possible kind of picture to our investors as to what we expect for the year. But agriculture is a very uncertain business until you actually go and harvest the fruit and sell it in some cases. So we tend to remain somewhat cautious at the beginning of the year, given that seasonality is still far away from us. As far as dispositions are concerned, in 2026, we expect to continue doing little marginal improvements to our portfolio with some emphasis in California, for example. And we will do so whenever we have the opportunity to do it at what we consider fair prices that reflect the intrinsic value of the assets that we are disposing. Given all of that, we felt very comfortable in raising our current dividend by 50% to $0.09 per share per quarter. And we look forward to proving to the market that, that was a very strong choice, a very, very good choice and possibly, hopefully, outperforming the performance that we are expecting for the year. And with that, I will turn the call to Susan Landi, our CFO. Susan?

Thank you, Luca. I'll be covering the financial results from 2025 and guidance for 2026. I'll be referring to the supplemental package, which is available on the Investor Relations section of our website under the subheader Events and Presentations. Net income was $32.2 million for 2025 and $21.8 million for the quarter or $0.65 and $0.49 per share available to common stockholders, respectively, which is lower than the same periods for 2024. AFFO was $17.9 million for 2025 and $11.4 million for the quarter or $0.39 and $0.26 per weighted average share, respectively, which was higher than the same periods for 2024. There are several key drivers of these variances. Total operating revenues declined by approximately $6 million, but this is primarily because of the dispositions that occurred in 2024 and 2025. These declines were partially offset by an increase in variable rents during the fourth quarter and increased interest income due to higher average balances on loans under the loan program. Overall, total operating expenses, excluding impairments, were down by approximately $3.6 million. This is primarily due to lower property operating costs and depreciation related to 2024 and 2025 dispositions and lower G&A expenses due to lower bonus expense in the current year and a onetime severance expense of $1.4 million and accelerated stock-based compensation that was recorded in the prior year. Impairment of assets increased by $17 million, which was related to certain West Coast properties that we have concluded had a loss in value. This impairment was recorded in Q2. Other income was lower than prior year due to lower gains on property dispositions, but this was partially offset by a $9.2 million reduction in interest expense as a result of significant reductions in debt that have occurred since October of 2024. The increase in AFFO primarily relates to the increased activity under the FPI Loan Program, lower interest expense from the reduction of outstanding debt and overall lower operating expenses. There are a few key -- a few capital structure items that I'd like to highlight. First, we had undrawn capacity on the lines of credit of approximately $164 million at the end of December 2025. As of today, we have undrawn capacity of approximately $111.7 million. The net borrowings subsequent to year-end were primarily utilized to redeem the remaining 68,000 outstanding Series A preferred units. This removed the common stock overhang and further simplified our balance sheet. We also successfully amended our Farmer Mac Facility in December, which led to an increase in our facility size from $75 million to $89.6 million. Format life loans have resets coming up in 2026 on debt that totals approximately $26 million. One of these loans repriced in January at 5.19%. Page 15 has our outlook for 2026. The assumptions are listed at the bottom of the page. The forecasted net income range is from $8.8 million to $10.9 million. The forecasted range of AFFO is $14.4 million to $16.4 million or $0.33 to $0.37 per share. On the revenue side, Fixed Farm, Solar, Wind and Recreation Rent reflects the full year impact of 2025 dispositions as well as lease renewals and variable payments crop sales and crop insurance is expected to decrease from 2025, partially from our early season outlook on citrus and avocados and partially from 2025 dispositions. On the expense side, a decrease in property operating expenses and depreciation, depletion and amortization is due to the dispositions that occurred in 2025. In addition, G&A decreased as a result of lower payroll costs, primarily due to the sale of MWA and due to lower expected credit losses on loans. Interest expense did increase as a result of borrowings that have occurred thus far in 2026. This summarizes where we stand today. We will keep you updated as we progress through the year. This wraps up our comments this morning. Thank you all for participating. Operator, you can now begin the Q&A session.

[Operator Instructions] And we will take our first question from Stefan (sic) [ John ] Massocca from B. Riley.

Maybe looking at the guidance, you mentioned a little bit of the drivers. As I'm thinking about the change versus in variable rent versus 2025, kind of how much of that is asset sales roughly? And how much of that is just a different look on kind of farm revenue?

Luca, do you want to take that question, please?

I'm going to take a first pass and then I'll hand over to Susan. On the variable payments, there is -- it's a little bit of both, actually. There is both asset dispositions and the fact that some of our variable payments performed really, really strongly in Q4 of 2025, and we are taking a little bit more cautious approach in forecasting their performance in 2026 in Q4. And to be honest, this is really not based on any hard knowledge because both crop yields and crop pricing in Q4 is completely unknown to us. It's just a matter of kind of being a little bit more cautious in our forecast. Susan, anything that you want to add to that?

No, except that the majority of the decrease does relate to dispositions. We did have -- our farm rents were a little -- they were relatively flat. So we did primarily single year renewals as a result of that. But I'd say the vast majority of that decline would be related to 2025 dispositions. Yes, for the fixed farm rent.

And then maybe sticking with guidance a little bit. As I think about kind of the year-over-year decline that's expected in G&A, how much of that maybe is Murray Wise? How much of that is related to kind of expectations around your loan portfolio and how much of that is just other kind of efficiencies, and I guess maybe longer term, is the 2026 number, you think close to what the run rate maybe is for you as an operating business?

So a large part of...

Let me handle that one, if you don't mind. So Murray Wise is a significant reduction in the G&A cost because we had quite a few employees, which we no longer have on the payroll. So it's a big chunk of it. But we are also making some other cost reductions in the company and our general overhead costs. So it's a combination of all of those things. And frankly, think that's sustainable and ongoing run rate is where we are for the '26 year.

Okay. And then on the disposition side, how should we kind of think about the runway for dispositions? How much of that is maybe contingent on the California market becoming more open and having more transaction activity? Are there other things kind of in your portfolio that you think are kind of salable today beyond some of your core Corn Belt holdings?

So everything in the portfolio is salable. I mean nothing that wouldn't sell. As far as California goes, the market there is now open again. The pricing isn't great, by the way, but the market is open again. You went through sort of the catharsis of buyers and sellers being super separated in terms of expectations of value, but that's now -- gap is now closed out. So there's transactions occurring again. We will continue to weed out California. We have soured on California full stop. The very best properties we have in almonds, in particular, almonds and other tree nuts likely to hold those. That Olin transaction is incredibly good for us. But for most of the rest of it, we will gradually liquidate it. But we're disciplined in terms of achieving the highest reasonable prices that we can get under current market conditions. As far as the rest of the country goes, the overwhelming majority outside of California is now based in Illinois. We will continue to sort of whittle down exposure in other states as much as anything for efficiency reasons at this point. If you only -- if you're down to just 1 or 2 farms in a state, you either got to grow again or you need to, frankly, liquidate those. And so we'll see some sales there. And then things in Illinois are for sale if somebody wants to pay top dollar. We are super, super bullish on Illinois. A lot of those assets are up 30% or more since we purchased them. But if we can achieve those gains and distribute to shareholders, we certainly, as we've proven in the past, are willing to do that.

Okay. And then just one kind of maybe technical follow-up. If you did sell a meaningful amount of California assets, I know it would kind of depend farm to farm, but would that have more of an impact on your kind of fixed farm rents? Or would that flow through to kind of some of the variable rent opportunities?

It'd be strong -- it'd be a bigger impact on a variable rent.

Our next question comes from the line of Craig Kucera from Lucid Capital Markets.

I believe you had 2 FTI loans that were scheduled to mature at the end of January. Were those repaid? Or were there any extensions?

Yes. We did extend those to September.

Extended them to December at the end of the year. Okay. Great. And it would seem like you've seen a decent pickup in that program over the last year. Are you still seeing a decent amount of demand?

Yes. The opportunity in the loan program is pretty strong these days. The loan program is kind of countercyclical in many ways to land prices and farmer economics. So we're in an environment where there are some struggling farmers. So therefore, we have some loan opportunities. As long as we're comfortable with the collateral, we frankly like to keep those loans out as long as we can because the returns are strong. That's the extension we made. We're not troubled by extending as long as collateral is still solid. And so I would say that, that program will be either growing a little bit or a steady state for the next year.

Okay. That's helpful. Changing gears, I think you mentioned in the supplement that you had a lease that transitioned from fixed to variable. It was fixed and variable and it became just variable. How meaningful was that to the fourth quarter variable payments? And was that lease now going to be sort of a standard 3-year type of lease? Or was that one of those 1 years you discussed?

Luca, I don't know the specifics there, so you and somebody in the team can take that.

Yes. This was not a very significant movement. Off the top of my head, it was a 1-year extension on a farm in California that we have then disposed of, I believe. In any case, it was not particularly significant to the P&L.

All right. Great. You got the Term Loan #1, which I believe you're in the process of refinancing here this quarter. I think it matures in March. Can you give us a sense of kind of where you anticipate that might price?

Go ahead, guys.

Okay. Susan, go ahead.

We think it's probably going to reprice at some point in the -- about the 5.3% range.

In other words, fairly very much in line with the other -- with the market conditions that we see for these type of loans.

Okay. Great. It sounds like you guys might sell a few assets out of California opportunistically. I know there aren't any acquisitions or dispositions in the guidance. But as you look at the market, whether that's in the Midwest or Southeast, are you seeing market pricing where you could accretively acquire at your current cost of capital or seeing transactions that are attractive?

So the answer to that question is pricing is not down any significant amount anywhere in the country. In the core of the Midwest, it might be down 2% or 3% at most from the peak. The other states may be a little bit more. California, of course, is different, but we're not going to be acquisitive there in any case. So I would say when you think about making good -- this is an asset class where 2/3 of your return is appreciation and 1/3 is current yield. So you need to buy high-quality farms and you need to buy value and you need to be financed in a way that you can be patient because that increase in value will definitely come. It's sometimes a little lumpy, but it's highly certain. So we can find acquisitions where we could expand. Current yield will not be as high as we would want. If interest rates continue to lower, you may be in a place in which you're not running a negative spread between debt and farm yields, which makes expansion easier. That being said, our attitude is -- we don't need to grow for growth's sake. Our attitude is to create value for shareholders, whether that's through dispositions or through growth. It's about raising money, growing money, if you will, not growing crops or the size of the business.

[Operator Instructions] Our next question comes from the line of Tousley Hyde from Raymond James.

With the increase in the dividend, how should we think about the capital recycling strategy and uses of disposition proceeds going forward, particularly as it relates to share repurchases?

I think share repurchases as our stock price continues to appreciate, will probably decline. I still think we are trading way below our breakup value or liquidation value of the portfolio assets. But that gap has certainly narrowed here in the first quarter. So I think stock buybacks will be less common than they've been in the past, assuming that stock price holds. As far as increasing the dividend, we're increasing the dividend driven largely by increased AFFO. Obviously, it puts us in a position where we might have to make less special dividends to stay in tax compliance. But the dividend increase is largely driven by the cash flow expectation, not by asset sales. The dividends -- asset sales drive special dividends, but we don't really want to drive our regular common dividend based on asset sales because they're frankly unpredictable.

Got you. Okay. Yes, that's helpful. And then I did have one quick follow-up related to the FPI Loan Program. I just want to make sure I'm understanding the accounting and kind of the contract terms correctly here with some of these renewals. If the original terms called for principal and interest to maturity, is that entire balloon payment kind of being repackaged and extended out? Or is the interest being collected and just the principal being extended?

Usually, we are getting interest along the way and principal is what's being extended, not just -- we don't have -- we tend not to capitalize interest. I wouldn't say never, but that's not the ordinary course for us in most of our loans.

There are no more further questions. I will now hand the call back over to our President and CEO, Mr. Fabbri, for closing remarks.

Thank you, Dustin, and thank you, everybody, for joining us today. We appreciate your interest in our company and look forward to updating you on our activities and results in the coming quarters.

The meeting has now concluded. Thank you all for joining. You may now disconnect.