Farmland Partners Inc. (FPI) Q4 2022 Earnings Call Transcript

Farmland Partners Inc. (FPI) Q4 2022 Earnings Conference Call February 23, 2023 11:00 AM ET

Corporate Participants

Christine Garrison - General Counsel & Secretary

Paul Pittman - Executive Chairman & Chief Executive Officer

Luca Fabbri - President

James Gilligan - Chief Financial Officer

Conference Call Participants

Dave Rodgers - Baird

Craig Kucera - B. Riley Securities

Operator

Welcome to nan Farmland Partners Inc., Q4 2022 Earnings Call. [Operator Instructions]. Thank you.

Now, fto maine move nan telephone complete to, Paul Pittman, Chairman and CEO. Go ahead, Paul, you whitethorn begin.

Paul Pittman

Good greeting and invited to nan Farmland Partners 4th fourth and afloat twelvemonth 2022 net convention telephone and webcast. We admit you taking nan clip to subordinate america for these calls, we spot them arsenic an important opportunity to stock pinch you our reasoning and our strategy successful a format little general and much interactive than nationalist filings and property releases.

I will now move it complete to our General Counsel, Christine Garrison, for immoderate customary preliminary remarks. Christine?

Christine Garrison

Thank you, Paul and convey you to everyone connected nan call. The property merchandise announcing our 4th fourth net was distributed aft marketplace closed yesterday. The supplemental package has been posted to nan Investor Relations conception of our website nether nan sub header Events and Presentations.

For those who perceive to nan signaling of this presentation, we punctual you that nan remarks made herein are arsenic of today, February 23, 2023 and will not beryllium updated consequent to this call.

During this call, we will make forward-looking statements, including statements related to nan early capacity of our portfolio, our identified and imaginable acquisitions and dispositions, effect of acquisitions, dispositions and financing activities, business improvement opportunities arsenic good arsenic comments connected our outlook for our business, rents and nan broader cultivation markets. We will besides discuss definite non-GAAP financial measures, including nett operating income, FFO, adjusted FFO, EBITDAre and adjusted EBITDAre. Definitions of these non-GAAP measures arsenic good arsenic reconciliations to nan astir comparable GAAP measures are included successful nan company's property merchandise announcing 4th fourth and afloat twelvemonth net which is available connected our website and is furnished arsenic an grounds to our existent study connected Form 8-K dated February 22, 2023.

Listeners are cautioned that these statements are taxable to definite risks and uncertainties, galore of which are difficult to foretell and mostly beyond our control. These risks and uncertainties tin origin existent results to disagree materially from our existent expectations and we counsel listeners to reappraisal nan consequence factors discussed successful our property merchandise distributed yesterday and successful documents we person revenge with, aliases furnished to nan SEC.

I would now for illustration to move nan telephone to our President, Luca Fabbri. Luca?

Luca Fabbri

Thank you, Christine. I will make immoderate very little remarks astir nan twelvemonth down us.

2022 has been a very beardown twelvemonth U.S. agriculture successful wide and our institution Farmland Partners successful particular. Global events has really highlighted passim 2022, nan cardinal domiciled nan U.S. agriculture plays successful addressing world nutrient demand, partially a blessing of geography. But besides acknowledgment to nan absolute world-class infrastructure that nan excavation of talent nan U.S. agriculture enjoys, particularly connected nan statement harvest side, precocious yields and precocious prices person led to beardown P&Ls for farmers. These are increases owed to ostentation successful definite farming inputs. But nan biggest costs facet summation successful businesses successful wide successful 2022, liking rates has only affected U.S. agriculture arsenic a whole, comparatively marginally because of nan very debased leverage successful nan manufacture successful nan debased teens.

The beardown husbandman profitability has and profitability of nan full assemblage is translated into beardown pricing for farmland successful wide arsenic an plus people which, of course, we person greatly benefited from, but besides helped nan institution person a very beardown renewal play for our rents successful either specifically nan rents that we rolled, particularly successful nan fixed rate rents successful statement crops we person seen increases of 16% crossed nan committee [indiscernible].

More successful wide for FPI, it's been a beardown year, we were capable to present importantly earlier successful nan twelvemonth arsenic we were looking down nan pike astatine nan liking complaint increases. We were capable to fortify relationships pinch our lenders, putting america successful a very, very beardown liquidity position.

I mentioned nan beardown rent renewals. On nan antagonistic side, we person faced contempt delivering higher liking costs, of people that person impacted our P&L. But also, we are experiencing imperishable crops truthful it will beryllium of nan other that what we person knowledgeable successful statement crops. Our portfolio successful imperishable crops is heavy weighted successful California, which has knowledgeable respective years of drought, starring to debased yields, while astatine nan aforesaid time, globally, location has been imperishable harvest markets person knowledgeable a operation of debased demands still owed to lingering COVID impacts arsenic good arsenic precocious yields.

Overall, our acquisition activity successful 2022, has been somewhat modest, mostly owed to nan precocious costs of capital, some equity and debt. We person been very choosy successful our acquisitions, but we person been capable to really seizure nan imaginable transactions that were peculiarly attractive.

With that, I will walk nan level to Chairman and CEO, Paul Pittman, for immoderate remarks connected nan outlook.

Paul Pittman

Thank you, Luca.

So it's benignant of a bad woody present that Luca gets to talk astir past year, which was beautiful beardown year, and I get to talk astir adjacent year, which will beryllium rather a spot of a challenge. But really wherever we are is, is we person faced arsenic Luca said important drought successful California. That drought is, arsenic you each know, benignant of down america successful nan consciousness that it has been incredibly rainy and snowy connected nan West Coast. The problem arsenic it translates into our P&L, and obviously, nan banal value this greeting is reflecting this is that there's a important pail of gross that comes from those specialty crops successful nan pursuing year. So nan deficiency of rainfall down america will lead to a comparatively challenged specialty harvest capacity successful nan 2023 almanac year. And that added pinch nan accrued costs of liking rates is what's doing nan harm to our AFFO for nan 2023 year, arsenic you spot successful nan guidance.

That being said, it does benignant of group nan shape for what hopefully would beryllium a beautiful beardown 2024 because we're going to see, a important return successful specialty harvest volumes a small difficult to foretell price. But we'll spot volumes recovers substantially. But that doesn't person an effect, unfortunately, until 2024. So reasoning benignant of broadly astir what's occurring here. Farmland has 2 components of return. It ever has, and it's nan existent output and nan plus appreciation. The plus appreciation is astir apt nan bigger of nan two. And we person seen very, very beardown plus appreciation, surely amongst our statement harvest properties and contempt nan drought, astir apt to immoderate degree, moreover among nan specialty crops, ostentation drives Farmland values up without question.

What we're very disappointed astir and I'm a immense shareholder. So I'm personally very disappointment pinch is each of nan very beardown things happening successful nan workplace system and therefore, successful our portfolio, connected nan statement harvest side, are being taken distant by nan volatility, nan antagonistic volatility astatine this constituent successful clip connected nan specialty harvest side.

This is starring to banal value that fundamentally vastly undervalues nan portfolio. We ain immoderate of nan champion farmland successful nan world. And we are trading astatine a very ample discount. That being said, from an investor's perspective, and from my perspective, arsenic a stockholder, we've sewage to do thing to extremity having nan comparatively smaller portion of our assets 20%, 25% of our assets are successful these specialty crops, benignant of being nan tail that's wagging nan dog.

This is nan roar times for statement crop, it will spell connected for astatine slightest different twelvemonth connected nan statement harvest side. And we've got, arsenic I said, nan antagonistic effect of volatility connected nan specialty harvest side. What that's frankly causing america to do is earnestly measure fixed wherever we want to beryllium arsenic a institution arsenic a unchangeable semipermanent shop of value, whether we should proceed to beryllium progressive successful nan specialty harvest business. It's important to retrieve that a mates of years ago, particularly harvest broadside of our business was nan motor of AFFO and was performing rather strongly. And location is this ebb and flow.

But, arsenic I said, nan volatility caused successful nan specialty harvest broadside of nan business and there's benignant of nary building you tin get group up to return that distant aliases astatine slightest not very, very galore structures that could return it away, is really hurting nan underlying communicative that is so, truthful powerful and truthful successful connected nan statement harvest side. It's really benignant of almost a communicative of 2 different industries, successful position of our what's happening to nan underlying tenant guidelines and operations of nan 2 businesses, and therefore, effect connected our rents from nan 2 different sides of nan business.

The champion worth successful Farmland today, successful my sentiment is, we were present a fewer years ago, and we're present again, nan champion worth retired location successful nan marketplace is, frankly, our stock. We tin bargain high-quality farmland done our banal amended than we tin do by buying farms. So it's thing we request to really benignant of attraction connected arsenic a company.

So my position is that nan underlying workplace system is very beardown connected nan overwhelming mostly of our assets, nan statement harvest side, that nan specialty harvest broadside will substantially recover. Because nan drought has been lessened rather a spot this winter. But nan P&L effect of that betterment is unluckily not going to really show up until nan 2024 year.

During Q&A, obviously, consenting to spell deeper into this and what we're seeing retired location and what we intend to effort to do. But I'm going to move it complete to James, to spell done nan comments regarding past 4th and past twelvemonth performance.

James Gilligan

Thank you, Paul. I'm going to screen a number of items today, including summary of afloat twelvemonth 2022 and Q4 2022, reappraisal of superior building and liking rates, greater item connected gross build and guidance for 2023.

I'll mention to nan supplemental package successful my comments. As Christine said nan supplemental is disposable successful nan Investor Relations conception of our website nether nan sub header Events and Presentations.

First, I'll stock a fewer financial metrics that look connected Page two. For nan 12 months ended December 31, 2022, nett income was $12 million, compared to 10.3 cardinal for '21, an summation of 1.7 million. Net income per stock disposable to communal stockholders was affirmative $0.16 compared to antagonistic $0.17 for '21, an summation of $0.33. AFFO was $15.8 million, compared to 0.4 cardinal for '21 an summation of 15.4 million.

AFFO per weighted mean stock was $0.30 compared to $0.01 for '21, an summation of $0.29. Improved capacity was owed to accrued hole rents, accrued brokerage and auction revenue, reduced litigation expense, and reduced distributions connected preferred stock. Cost of equipment sold was higher successful 2022 owed to nan greater number of farms nether nonstop operations successful 2022, compared to 2021.

General administrative expenses were higher successful 2022, mostly owed to nan acquisition of Murray Wise Associates aliases MWA arsenic we opportunity internally successful precocious 2021. For nan 3 months ended December 31, 2022, nett income was 6.7 cardinal compared to 13.3 cardinal for Q4 '21, a alteration of 6.6 million. It should beryllium noted nan summation connected disposition of assets was 7.2 cardinal little successful Q4 2020 compared to Q4 2021, accounting for each nan alteration successful nett income betwixt nan periods.

Net income per stock disposable to communal stockholders is $0.11 compared to $0.14 for Q4 '21 a alteration of $0.03, again this was impacted by nan quality successful summation connected disposition of assets arsenic noted a infinitesimal ago.

AFFO was 10.0 cardinal compared to 8.9 cardinal for Q4 '21, an summation of 1.1 million, AFFO per weighted mean stock was $0.18 compared to $0.19 for Q4 '21, a alteration of $0.01. Q4 '22 showed higher fixed rents, guidance fees, liking income, nonstop operations, profits and little litigation spending compared to Q4 2021. Those items are offset by little adaptable rents, accrued wide and administrative expenses and higher spot operating expenses, mostly owed to higher authorities franchise taxes, higher spot taxes and higher security premiums.

Next, I will skip up to Page 13 to make a mates of comments astir our superior structure. Total indebtedness astatine December 31, 2022, was 439.5 million. Since December 31, 2021, we've reduced indebtedness by complete $70 million. Fully diluted stock count arsenic of February 17, was 55.6 cardinal shares. If you look astatine nan array connected nan bottommost of nan page, betwixt nan MetLife in installments facility, and nan Rutledge Farm Credit Mid America in installments facility, we person undrawn capacity successful excess of $160 cardinal today.

As shown successful erstwhile quarters, we person astir $174 cardinal of MetLife debt, pinch rates that reset successful 2023. These are indebtedness numbers 1, 4, 5, 6, 7 and 10. The notes astatine nan bottommost of nan page show nan 4 loans representing astir 109 cardinal of that 174 cardinal that person already been agreed to. 5 cardinal has been reset to 5.63% and 104 cardinal has been reset to 5.55%. The reset loans besides person accrued elasticity to prepay without penalty, up to 40% of original main equilibrium per year.

Next, I will move to Page 14 to supply an overview of our income statement. Over nan past twelvemonth we presented numbers and categories shown connected nan apical array connected Page 14. Fixed payments, adaptable payments, nonstop operations, gross profit and different items. This was an effort to make nan business easier to understand. However, this position whitethorn person made it a small difficult to exemplary retired nan business because it did not item retired nan building blocks that comprise nan different categories.

The 2nd array connected Page 14 does conscionable that. It shows nan building blocks for some GAAP revenue, statement items and supplemental categories. Reading crossed nan rows and you tin spot what makes up nan supplemental categories and reference down nan columns you tin spot what makes up nan GAAP statement items.

Page 15 shows these building blocks described connected nan erstwhile page for 2021 and 2022 by 4th pinch comments astatine nan bottommost of nan page to picture nan differences betwixt nan periods. A fewer points to item our fixed workplace rent accrued arsenic we acquired properties and renewed leases and decreased pinch dispositions. Solar accrued successful 2022 is simply a ample task successful nan authorities of Illinois commenced its building phase, tenant reimbursements declined pinch plus dispositions and farms that converted to nonstop operations. Management fees accrued arsenic we negociate much acres for 3rd parties successful 2022 compared to 2021.

In Q4 2022, we acquired onshore and buildings for 4 cultivation instrumentality dealerships successful Ohio, nether nan John Deere brand. The accounting curen classifies those acquisitions arsenic financing transactions, truthful connected nan equilibrium sheet, they look arsenic loans. Now connected nan income statement, it impacts liking income. This accounts for nan summation successful liking income successful nan 4th fourth of 2022.

Variable payments were down owed to little capacity successful character nuts and grapes caused by little prices and yields during nan Q4 harvest. In addition, citrus farms person produced adaptable payments successful 2021 converted to nonstop operations successful 2022. Direct operations arsenic a operation of harvest sales, harvest security and costs of equipment sold, it was up successful 2022 because of nan citrus farms that converted to nonstop operations, arsenic mentioned a infinitesimal ago.

Other items accrued for nan afloat twelvemonth of auction and brokerage activity successful 2022 compared to 2021. At nan bottommost of nan table, we show nan summation successful fixed payments connected aforesaid statement harvest farms. When we talked astir aforesaid statement harvest farms, we mean statement harvest farms that were successful nan portfolio earlier nan opening of nan play being compared aliases successful this lawsuit January 1, 2021. It does not see specialty harvest farms, acquisitions, dispositions, aliases different non-comparable farms betwixt nan periods. This group is up astir a cardinal dollars betwixt nan years.

Next connected Page 16, we comparison nan guidance scope from October to existent capacity pinch notes astatine nan bottommost of nan page. Direct operations gross profit was little than expected owed to little pricing and yields successful nan Q4 harvest play and harvest security payments person a lag successful 2023. Property operating expenses were up compared to expectations owed to nan required in installments allowance connected nan Ohio ag instrumentality dealership acquisitions higher than projected authorities franchise taxes successful nan 4th fourth and higher than projected spot taxes successful nan 4th quarter.

On nan adjacent page, Page 17, we person nan outlook for 2023 utilizing those aforesaid building blocks described connected Page 14. On nan gross side, fixed workplace rent increases owed to caller leases signed and farms acquired successful 2022 that will lend a afloat twelvemonth successful 2023. Solar upwind and recreation are up slightly, while tenant reimbursements will beryllium beautiful accordant pinch 2022.

Interest income increases pinch a afloat year's publication from nan Ohio instrumentality dealerships mentioned before. The adaptable payments and nonstop operations are decreasing and 2023. The alteration successful adaptable and nonstop operations is owed to nan items Paul noted successful his comments. Lower yields owed to upwind and mediocre pricing owed to proviso request imbalances.

On nan disbursal broadside spot operating expenses are expanding owed to assumptions of higher spot taxation and higher security premiums. G&A is successful statement pinch 2022. Legal and accounting decreases pinch little litigation spend. Litigation walk will beryllium down from astir 1.3 cardinal successful 2022 to an estimate of $250,000 successful 2023. Interest disbursal is up owed to higher guidelines rates connected floating complaint indebtedness and liking resets that will hap aliases person already occurred successful 2023.

The bottommost of nan page provides greater item connected nan assumptions down liking expense. We usage guardant curves successful Bloomberg, an estimated remaining 2023 resets and three-year treasuries positive humanities spreads. This consequence successful AFFO and nan 9.3 to $13.5 cardinal range, compared to $15.8 cardinal successful 2022. AFFO per stock is successful nan scope of $0.17 to $0.24 compared to $0.30 successful 2022.

This wraps up my comments this morning. Thank you each for participating. Operator, you tin now statesman nan Q&A session.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions]. Thank you. We now person nan first mobility from nan statement of Dave Rodgers of Baird.

Dave Rodgers

Paul, I wanted to commencement pinch your comments astir nan specialty crops and your belief that that's evidently having a beautiful large antagonistic effect connected nan banal recently. And today, it seems for illustration NOI successful nan guidance is really not that acold disconnected and possibly a small little than anticipated. But certainly, nan liking disbursal is much disappointing, and I deliberation you've communicated immoderate of that. But I conjecture what gives you nan consciousness that nan specialty crops are nan large resistance connected nan portfolio. And then, I conjecture possibly a follow-up to that is if you chose to waste those and reinvest that capital, really would you do that?

Paul Pittman

Yes. Look, this is thing we're evaluating. So nary 1 should return from our comments that we are going to exit specialty crop, but we're surely considering it. So here's a large image and I'm utilizing these things a small spot anecdotally, truthful please don't return precisely nan number and spell exemplary it. But successful nan leases, we rolled complete connected nan statement harvest side, Luca alluded to this, and I deliberation James did arsenic well. We sewage a 16% mean summation connected nan fixed rate rents connected nan statement harvest that we rolled complete to caller 3-year leases. And if you callback past year, we sewage astir 10%, I think, erstwhile we did those rolls thing successful that range.

So connected nan statement harvest side, nan precocious inflation, beardown yields connected nan crops and precocious harvest prices owed to worldwide shortages of these cardinal commodities is driving america to person an expanding affirmative returns and results, increasing rents fundamentally and quickly appreciating plus values connected nan statement harvest side.

When we move to nan specialty harvest side, what we are experiencing and it's mixed up and analyzable unraveled because of each nan specialty crops pinch nan objection of citrus, nan astir of nan gross aliases a ample information of nan gross shows up successful nan adjacent twelvemonth successful these agelong trading tails. So nan antagonistic effect of nan drought is really having a 2023 effect adjacent to aliases greater than nan drought effect during nan 2022 financial year. So nan '23 twelvemonth gets wounded by nan '22 drought.

And past connected apical of that, what has happened is successful galore of these crops, we had a large harvest coming disconnected nan '21 year. We've sewage excess proviso successful galore parts of nan world connected nan character nuts, especially. So you've sewage this double-whammy arsenic we task during nan '23 twelvemonth of comparatively debased output owed to nan drought and frankly, comparatively debased value owed to nan supply-demand imbalances connected a worldwide basis.

So backmost to your halfway of your question, is what diversification has gotten america is there's thing bad going connected location each nan time. And it is very frustrating to maine arsenic a shareholder and arsenic nan Chairman and CEO, and what we want to effort to do is fig retired a measurement to substantially dampen that volatility. Because you've been pinch us, Dave, for galore years now arsenic an expert connected nan company, and what happens connected nan statement harvest side, successful nan bad times, and we lived done them successful your '15 done '19, basically, 2015 to 2019, you're talking astir possibly you can't get a rent increase, but you're not talking astir large rent decreases. And nan logic is, it's fixed rate rent. And truthful nan bad era successful nan statement harvest side, and it will travel again, doesn't drastically trim and create volatility successful our P&L.

The specialty harvest side, because of nan quality of nan measurement those leases are, and we get these large swings. And I deliberation it's frankly hurting us, and it's hurting nan value of those stocks. So we've sewage to fig retired really to person that extremity happening, mightiness beryllium associated ventures, mightiness beryllium dispositions, mightiness beryllium immoderate different measurement of structuring our leases. There's a batch of choices. But we've sewage to get that problem to frankly spell away. I dream that answers your question.

Dave Rodgers

Yes. I admit that color. And I wanted to spell backmost to 1 different remark you made wherever you thought astir 2/3rds of nan worth of owning a workplace complete clip arsenic nan appreciation successful nan land. And I conjecture I wonderment wherever you deliberation headdress rates are going successful yields person moved. And I deliberation possibly portion of that mobility comes from nan truth that you're repricing indebtedness into nan mid to precocious 5s, which is mostly now accordant pinch wherever your implied headdress complaint is. So I'm curious, again, really you position benignant of nan underlying workplace marketplace and prices moving location pinch nan fierce move successful indebtedness costs that we've seen.

Paul Pittman

Yes. The bully news successful galore respects is that nan farmland marketplace has continued to admit moreover pinch higher liking rates. These precocious liking rates will gradually put a damper connected prices. They conscionable communal consciousness and history suggests they must. But it hasn't really occurred yet and it is and erstwhile I opportunity put a damper on, it will extremity nan maturation of nan plus values. It won't astir apt reverse it very much, if astatine all, connected nan statement harvest side. And nan logic for that is nan overwhelming magnitude of these purchases are done pinch cash. The farmers are rather profitable. Farmers thrust nan plus values connected nan statement harvest side, not institutions. And truthful they bought farms. Those farms are successful very beardown hands. And truthful I conscionable don't deliberation you're going to spot plus values travel disconnected pinch precocious liking rates, and we surely haven't seen it hap yet connected nan statement harvest side.

Institutions for illustration america and america successful particular, because that's what I cognize about. These precocious headdress rates person really dampened nan magnitude of purchasing we are doing of caller farms. And it's going to into nan costs of superior goes backmost down. I mean erstwhile it's difficult for america to bargain farms astatine a antagonistic spread, moreover though we're very assured nan 5.5% aliases greater mean yearly appreciation of statement harvest farmland will continue. I mean that's a statistic that's successful spot now for much than 50 years. It's not going to change. But it's difficult for america arsenic a nationalist institution to beryllium successful nan marketplace erstwhile our costs of indebtedness superior is successful excess aliases adjacent to 5.5%.

Back to nan headdress rates connected nan underlying assets, nan problem is you return high-quality Illinois farmland, it is trading coming astatine a 2.5 cap. And I don't spot that changing. It's a countercyclical plus people erstwhile you get correct down to it. It's not really driven by Wall Street aliases organization money. It's driven by mini municipality agrarian America money primarily. And worldwide nutrient request climbs, supply/demand volatility of nan cardinal commodities astir nan world is high. It's Ukraine, South American drought each kinds of different issues. So high-quality U.S. farmland is continuing to beryllium viewed by nan group that thrust nan underlying plus worth is simply a very, very bully investment, a awesome shop of capital, a awesome semipermanent wealthiness creator. What we've sewage to do is fig retired really to get that to person into our banal price. And unfortunately, we're not communicating that very good for immoderate logic and portion of it is volatility connected nan specialty crops side.

Operator

Your adjacent mobility comes from Rob Stevenson from Janney.

Unidentified Analyst

This is [indiscernible] for Rob Stevenson. Just wanted to spot if you could please supply much penetration connected nan 4 4 cultivation instrumentality dealership acquisitions?

Paul Pittman

Yes. So we acquired nan existent estate, not nan operations. We acquired nan existent property underneath 4 different John Deere dealerships successful Ohio. The usability of those dealerships is simply a institution called Ag-Pro. Ag-Pro is nan largest John Deere dealership web successful nan United States. They person thing successful excess of, I think, 80 abstracted dealerships. We bought those 4 dealerships. The driving logic to do that transaction is really respective cardinal points. First is nan headdress complaint and nan return connected those is beautiful beardown -- surely stronger existent output than you knowledgeable connected farmland successful astir cases, surely connected statement harvest farmland.

Second large driver is that location was frankly consciousness for illustration those dealerships are successful locations, particularly, a mates of them, wherever we get beautiful bully semipermanent appreciation of nan underlying asset. John Deere dealerships are really tied powerfully to nan statement harvest workplace system successful particular. So we deliberation it matches up pinch our wide benignant of thesis that statement harvest farmland is very valuable. It will proceed to admit value. We deliberation these assets admit worth in installments value tenants, is evidently rather high.

But successful addition, it networks america done that trader web to a full batch much farmers, a full batch much relationships. I mean, we're frankly benignant of wrapping ourselves successful nan emblem of John Deere, a small spot successful position of really we tin scope retired to farmers that usage that trader network. And that's 1 of nan strongest brands successful nan world, frankly. It's surely nan strongest marque successful agriculture.

So there's a batch of benignant of synergistic benefits to cracking that doorway opening and making immoderate investments successful that sector. But it will not beryllium nan halfway of our business by immoderate means. It will stay a mini percent of what we do. because what we really want to attraction connected astir is really nan statement harvest farmland and high-quality workplace assets mostly that admit complete time. So it's really nan halfway of our semipermanent story.

Operator

[Operator Instructions]. Our adjacent mobility comes from nan statement of Craig Kucera of B. Riley Securities.

Craig Kucera

I apologize if I missed this, there's a batch of calls going connected correct now. But James, I cognize that you had nan indebtedness resets present that you announced successful nan property merchandise that a resetting present successful nan first quarter. How are you reasoning astir dealing pinch nan remaining resets successful '23 and successful '24, do swaps aliases liking caps travel into play?

James Gilligan

Yes. We've looked astatine that a small bit. Our assumptions are we benignant of noted them successful nan supplemental wherever we supply guidance. What we're benignant of looking astatine is, we're looking astatine nan guardant curves, and we're besides utilizing benignant of humanities spreads to deliberation astir benignant of really those will apt reset erstwhile we travel upon those dates. So that's really we've benignant of modeled them now. We person had a batch of conversations pinch not only nan incumbent lender, but besides imaginable caller lenders connected ways to benignant of woody pinch that indebtedness successful a different fashion. And truthful we're continuing to bring title to carnivore wherever we can. Frankly, get everyone's bully ideas and attack those resets pinch each nan arrows successful our quiver that we can.

Craig Kucera

Got it. And Paul, I cognize that you thin to return a very semipermanent look arsenic astir farmers do connected nan plus worth and really to deliberation astir things. And your guidance has possibly $25 cardinal to $50 cardinal of plus sales, but does it make consciousness possibly to summation those income erstwhile you tin waste astatine specified a heavy discount to indebtedness costs and possibly amended your per stock results? Or really do you benignant of deliberation astir that arsenic we are successful a higher liking complaint environment?

Paul Pittman

So yes. We do surely deliberation astir plus income each nan time. Look, we equilibrium a assortment of things erstwhile we deliberation astir plus sales. First is, are we getting a really bully value and a adjacent worth for nan plus we ain and you're correct. There's a batch of money flowing retired location into this plus people and headdress rates are debased and we could waste assets and bargain backmost stock. Our accuracy mostly is don't waste what we telephone nan crown jewels type farms. If it's an A+ workplace aliases an A farm.

And nan logic is, it's almost intolerable to bargain that worldly backmost unless you salary dearly from a financial constituent of view. But if it is simply a workplace that's benignant of been underperforming aliases it's a workplace that we're not successful emotion with, we're really looking astatine many, galore plus sales. Don't want to benignant of overpredict a definite amount, which is why you spot nan guidance wherever it is. But I deliberation we're beautiful dedicated to trimming parts of nan portfolio that wherever we tin get a profit and redeploy that superior into indebtedness simplification aliases frankly into banal buybacks fixed what's happened this morning.

Operator

[Operator Instructions]. As we person nary further questions. I'd for illustration to manus it backmost to Paul Pittman, Chairman and CEO.

Paul Pittman

Thank you. Thank you each for joining america for this telephone telephone today. I mean I'm arsenic disappointed successful nan banal value capacity this morning, arsenic galore of you are. I deliberation it is important to support things successful position from a financial constituent of view, 2022 was a very beardown year. 2023, arsenic we person predicted, will beryllium a much challenging year, but that is nan quality of accumulation agriculture. It almost sounds trite, but that turn these crops outdoors. And truthful we will beryllium a taxable which has happened present of volatility driven by upwind and commodity pricing.

On nan different hand, it is nan semipermanent averages of capacity successful nan assemblage that drives Farmland plus values and semipermanent return. And we each cognize is that world nutrient request and location continues to spell up and therefore, request for farmland will proceed to spell up. And we are seeing that successful position of plus worth appreciation. That plus worth appreciation is frankly, astir apt each still occurring successful nan specialty harvest broadside of nan portfolio conscionable not arsenic quickly arsenic it is occurring successful nan statement harvest side.

And moreover though you person a twelvemonth of reliable capacity successful position of harvest yields and things for illustration that, nan semipermanent request for almonds and pistachios and citrus, it still a worldwide affirmative outlook. And truthful I don't deliberation you're going to spot important reductions successful plus values, but you're going to spot a challenging 12-month play of clip successful position of nan P&L successful beforehand of us. And we'll get done this. It will beryllium a existent affirmative semipermanent communicative and it will proceed to beryllium so.

On nan statement harvest side, successful particular, fixed what continues to hap pinch accumulation astir nan world, and what's going connected successful Ukraine/Russia U.S. farmland and U.S. and request for U.S. workplace crops will stay elevated successful our sentiment for nan adjacent 12 months astatine least, and that will beryllium affirmative for nan rent rolls we do successful nan 2023 year, for example.

With that, I'll conclude, and convey you each for your time.

Operator

Thank you each for joining. That does reason today's call. Please person a beautiful day. You whitethorn now disconnect your lines.