Greetings and welcome to Gladstone Land's first quarter earnings conference call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I would now like to turn the conference over to your host, Mr. David Gladstone, Chief Executive Officer and President. Thank you. You may begin.
Well, thank you, Devin. That was a nice introduction, and this is David Gladstone, and we welcome you to the quarterly conference call for Gladstone Land. Thank you again for all of you coming into this conference call and listening. We'll start off, of course, with Michael LiCalsi. He's our General Counsel and Secretary, and he's President of Gladstone Administration, which is the administrator for all the Gladstone funds. Michael, go ahead.
Thanks, David. Good morning. Today's report may include forward-looking statements for the Securities Act of 1933 and the Securities Exchange Act of 1934, including those regarding our future performance. These forward-looking statements involve certain risks and uncertainties that are based on our current plans, which we believe to be reasonable. Many factors may cause our actual results to be materially different from any future results expressed or implied by these forward-looking statements, including all risk factors in our Forms 10-K, 10-Q, and other documents we file with the SEC, and you can find these on our website. That's www.gladstoneland.com.
Specifically, go to the Investors page. You can always find them on the SEC's website. That's www.sec.gov. We undertake no obligation to publicly update or revise any of these forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
Today, we will discuss FFO, and that's funds from operations. FFO is a non-GAAP accounting term defined as net income, excluding the gains or losses from the sale of real estate and any impairment losses from property, plus depreciation and amortization of real estate assets. We may also discuss Core FFO, which we generally define as FFO adjusted for certain non-recurring revenues and expenses, and then Adjusted FFO, which further adjusts Core FFO for certain non-cash items, such as converting GAAP rents to normalized cash rents. We believe these are all better indications of our operating results and allow better comparability of our period-over-period performance. Please take the opportunity once again to visit our website, gladstoneland.com. Sign up for our email notification service so you can stay up to date on the company. You can also find us on Facebook.
Keyword there is The Gladstone Companies, and our Twitter handle is @GladstoneComps. Today's call is an overview of our results, so we ask that you review our press release and Form 10-Q, both issued yesterday, for more detailed information. Again, you can find them on the Investors page of our website. With that, I'll turn the presentation back to David Gladstone. David?
Okay. Thanks, Michael. As all of you know who are listening, from our press release yesterday, we're currently on about 104,000 acres of farmland on 141 different farms and over $1.2 billion in valuation. Our farms are located in 13 different states and, more importantly, in 27 different growing regions. I noticed you guys saw in The Wall Street Journal that Mr. Gates owns 120,000 acres and is supposedly the largest farm owner. Well, move over, Mr. Gates. We're coming through. Our farms continue to be 100% occupied, and they are leased to 79 different tenants, all of whom are unrelated to us. The tenants on these farms are growing over 55 different crops. If you look at these numbers now, the number of farms, we have enough different growing regions. We have many different farmers, many different types of crops.
I think we're sufficiently diversified to provide safety and security for the cash flows coming in from the rents. We believe this diversification will help protect our dividends that we pay to our shareholders. Our assets, of course, are farms that are growing food, and they're very valuable. With the number of farms we purchased at the end of 2020, we are starting 2021 on a high note with strong operating results after closing on $156 million in farms in the last three weeks of 2020. The new acquisitions for the first quarter were a bit light. That's kind of what happened to us last year.
We started off slow. While we replenish our backlog of potential farms to buy, it may take us a while to get up to the speed that everybody wants to see us buying $100,000 or $200,000 worth of farms every quarter.
However, we did close another large olive ranch, as they call it out West. These olive orchards are right after the quarter end, and expect to do more activity on the acquisition front in the next several months. We continue to be able to renew all expiring leases without incurring any downtime on any of our farms. Rent collections continue to come in largely as expected. We did have one tenant on a small farm in Michigan that looks like he was heading for bankruptcy. As a result, we terminated the lease with that tenant and immediately re-leased the farm to a new, stronger tenant at a good rate. It was a bit higher than what we had before, but not much.
Overall, operations in the farms remain strong. The demand for products grown on most of these farms remains high. These are products like berries, and vegetables, and nuts, which are things that we're experts at. Most of the vegetable and berry crops grown from our farms are sold in grocery stores. Demand in grocery stores these days is very strong. I know the restaurants are coming back. There's a lot of restaurants that are selling to homes directly, but grocery stores are really the strongest place to be these days. During the first quarter, the team acquired three farms for about $6 million, about $4 million of which was paid via issuing OP Units. This is like common stock in our company. We traded some common stock for the farmland.
In addition, as noted earlier, right after the quarter end, we acquired another large olive farm for about $38 million. We are heavy in the olive farm area. Overall, the initial net cash yields to us on these investments is about 5.3%. In addition, all the leases on these farms contain certain provisions, such as the participation rents, where we own part of the farm products that come off of these farms. Another thing that we do from time to time is annual escalations. That is, each year it goes up by 2% or 3% in terms of the rent. That should push the figure a little higher in the future, but these are not major changes. It's just a good way of doing business.
Just as a reminder, this yield figure does account for all the operating expenses that are responsible for under the leases, and most of these leases are Triple Net, so there shouldn't be much anyway in additional expenses, but the numbers do include those expenses that we have. On the leasing front, since the beginning of the year, we executed new leases or extended some existing leases on four of our properties located in California, Colorado, Florida, and Michigan. We did see a rent decrease with the renewal of a farm in the Midwest, but that was a one-year renewal that we executed with the expectation that we'll be able to increase the rents at the end of the year. With the rise in commodity prices lately, we think we'll be in a better shape on that farm next year anyway.
Looking ahead, we only have two leases scheduled to expire over the next six months, and they only make up less than 1% of our annualized leases. We're discussing with the existing tenants on these farms as well as some potential new tenants, and we aren't expecting any downtime on these leases. Overall, we currently expect the new leases on these farms to be equal to or slightly higher than they are today. Another update, we recorded about $2.4 million in participation rents in each of the past two years. We don't know the exact amount yet, but we're expecting a sizable increase in participation rents for 2021. This is because we have several more farms that were in our portfolio that have participation rent provisions in the leases.
Of course, we won't know how much, if any, will be received for several more months, probably in December, we'll get closer to knowing. Regarding where we are in environmental, social, governance standards, and ESG, as it's called, we're actively working on developing formal policies related to all of our disclosures. From a board diversity standpoint, 1/3 of our independent board members are women. We have no reason not to expect that we will be able to comply with all the board diversifications as well as the other things that are required, some of which have been proposed, not many have been adopted and formalized, such that they're going to go into effect this year.
Next year will be a year in which we'll see a lot of that happen. I wanted again to just briefly mention that Gladstone Acquisition is our SPAC that we recently filed.
Over the past several years, we have encountered some owners of large farm operations that wanted to sell not only their land but also their business. In some cases, we offered to buy just the land, but they wanted to keep the land and the operations together. As a real estate investment trust, Gladstone Land cannot own operating companies because the operating income would not permit it in the REIT status. Gladstone Acquisition was created as a potential way to take advantage of such opportunities where Gladstone Land can't participate. I'm going to stop here, and that's really enough on operations. I'll turn it over to our CFO, Lewis Parrish, to talk to you more about the numbers. Lewis?
All right. Thank you, David, and good morning, everyone. I'll begin with our balance sheet here. During the first quarter, our total assets increased by about $67 million. This was primarily due to net proceeds received from stock issuances, which are yet to be fully invested. From a financing perspective, during the first quarter, we secured about $10 million of new long-term loans at a weighted- average rate of 2.96%, which is fixed for the next 8+ years. In addition, in January, we raised about $15 million in net proceeds through the issuance of a new 5% Series D Term Preferred Stock, which is traded on NASDAQ under the ticker LANDM.
In February, we used about $29 million of those proceeds to redeem our Series A Term Preferred Stock, which carried a coupon of 6.375% and had a mandatory redemption date of September 2021.
On the equity side, since the beginning of the year, we've also raised about $16 million of net proceeds from the sale of our Series C Preferred Stock. Over the same time period, we've also raised about $59 million of net proceeds through the sale of our common stock under the ATM program. Our current ATM program originally allowed for $100 million of sales, which we have since sold out of. We will likely be looking to increase the size of the ATM program soon. Moving on to our operating results. First, I'll note that for the first quarter, we had net income of about $554,000 and a net loss to common shareholders of $2.2 million, or $0.082 per common share.
On a quarter-over-quarter basis, Adjusted FFO for the first quarter was approximately $4.7 million, compared to $3.6 million in the fourth quarter of 2020, an increase of about 31%. AFFO per share was $0.174 in the first quarter versus $0.147 in the previous quarter, an increase of about 18%. The increase in the per- share figure was a bit muted due to the recent equity issuances, the proceeds from which are still not yet fully invested. Dividends declared per share were about $0.135 for both quarters. The main drivers behind the increase in AFFO were higher top-line revenues and about $2 million of interest patronage recorded related to our loans from Farm Credit. Fixed base cash rents increased by about $2 million or 15% on a quarter-over-quarter basis, primarily driven by additional revenue earned from recent acquisitions.
This was partially offset by a decrease in participation rents as we recorded about $1.2 million more than the prior quarter. On the expense side, excluding reimbursable expenses and certain non-recurring or non-cash expenses, our core operating expenses increased by about $688,000 on a quarter-over-quarter basis. This was primarily driven by higher base management and incentive fees earned by our advisor during the current quarter. Removing related party fees, our core operating expenses increased by about $176,000. This increase was primarily due to additional property taxes incurred on certain of our farms, as well as miscellaneous operating expenses incurred related to our recent acquisitions. Overall, we felt this was a very strong quarter for us operationally. For one, our operating revenues of just over $16 million was the highest we've ever reported for a quarter.
Keep in mind that this was with only about $26,000 of participation rents being recorded. Of course, this was a result of all the new properties we put on the books in the latter part of 2020. In addition, our AFFO and AFFO per share numbers were both the second- highest we've ever reported. These were second only to Q1 of 2020, when we recorded a one-time lease termination fee of about $3 million. Moving on to net asset value. We had 32 farms revalued during the quarter, all via third-party appraisals. Overall, these farms increased in value by about $2.2 million, or 0.7% over their previous valuations from about a year ago. As of March 31st, our farms were valued at about $1.2 billion, and all of this was based on valuations via third-party appraisals or the actual purchase price.
Based on these updated valuations and including the fair value of our debt and all preferred stock, net asset value per common share at March 31st was $12.69, which is up by $0.46 or 4% from last quarter. Main drivers of the increase were a decrease in the fair value of our fixed long-term borrowings due to increases in market interest rates and the issuances of common stock through our ATM program at prices higher than our estimated NAV as of December 31st. Turning to our capital makeup and overall liquidity. From a leverage standpoint and with respect to our borrowings, our loan-to-value ratio on our total farmland holdings on a fair value basis and net of cash was about 47% at March 31st.
We continue to be comfortable at our current leverage levels, given the relative low risk of high-quality farmland as an overall asset class and the security of the resulting cash flows. Over 99% of our borrowings are currently at fixed rates. On a weighted average basis, these rates are fixed at 3.38% for the next six years. We believe we are currently well protected on the debt side against any future interest rate volatility. With the weighted average maturity of these borrowings being over nine years out, we also feel we're protected against any potential liquidity issues. Regarding upcoming debt maturities, we currently have about $31 million coming due over the next 12 months. However, about $16 million of that represents bullet maturities of four loans that are coming due.
The four properties collateralizing these loans have increased in value by a total of $6 million since their respective acquisitions. We do not foresee any problems refinancing any of these loans if we choose to do so. Removing these maturities, we only have about $15 million of amortizing principal payments coming due over the next 12 months, or about 2% of our total debt outstanding. From a liquidity standpoint, including availability on our lines of credit, we currently have over $100 million of dry powder, and we also have about $40 million of unpledged properties. After expanding our credit facilities with both MetLife and Farmer Mac during 2020, we have ample availability under our two largest borrowing facilities, and we continue to be in discussions with other lenders for new borrowings and potentially new credit facilities as well.
Overall, credit continues to be readily available to us from multiple lenders and at very favorable terms. Finally, I'll touch on our common distributions. We recently raised our common dividend again to $0.045 per share per month. Over the past 25 quarters, we've raised our common dividend 22x for a total increase over that time of 50% in our monthly common distributions. Since 2013, we've paid out 99 consecutive monthly dividends to common shareholders, totaling $5.12 per share in total distributions. Paying dividends to our shareholders is paramount to our business plan, and our goal is to continue to increase the dividend at regular intervals. At our current distribution run rate and with where our common stock price is today, the yield on our common stock is about 2.4%.
When considering the relative stability and security of the underlying assets and the related cash flows, we believe the stock continues to offer a compelling investment alternative, particularly in light of today's inflationary concerns. With that, I'll turn the program back over to David.
Okay. Thank you, Lewis. Nice report. I know all of you out there are always asking, do you have a lot of things you're going to buy and grow? Well, we continue to see a good amount of buying opportunities coming our way, and we hope we'll be able to announce some additional acquisitions in the coming months. As you can imagine, certain aspects of our due diligence process have ended up taking a long, long time due to the various travel restrictions or office closures.
Due to the various government restrictions related to COVID-19, many of the government offices will only let one person in at a time into that building. Hopefully, most of these restrictions will start lightening up soon, and that'll allow us to move a little quicker than we've been doing in the last year. Just a few final points.
We still believe that investing in farmland, growing crops that are contributing to a healthy lifestyle, such as the ones we have, fruits, vegetables, and nuts, follows a strong trend we're seeing in the markets that we service today here in the U.S. Currently, about 85% of our total crop revenue comes from farms growing types of food that you can find either in the produce section or the nut section of your local grocery store. We consider these foods to be among the healthiest types of foods, and we continue to see growing trends toward organic among our foods, and about 40% of our fresh produce acreage is either organic or transitioning to become organic. We like that trend, and over 10% of our permanent crops fall into the organic category, and we hope to add to that during the next year.
We believe the organic section is continuing to be a strong growth area. In addition, just to note, 95% of the crops grown on our farmland is classified as non-GMO, which is an important designation that we're trying to stay away from. Another major reason why our business strategy is focused on farmland growing fresh produce is due to the effects of inflation on this particular segment. According to the Bureau of Labor Statistics, overall annual food CPI generally keeps pace with inflation. However, over the last 40+ years, the fresh fruit and vegetable segment of the food category has outpaced the total CPI by a multiple of 1.5x . This is why many financial advisors tell their clients to invest in farmland, because it acts as a hedge against inflation.
While prices of commodity grain crops such as corn and wheat are typically more volatile and susceptible to global supply and demand, fresh produce is mostly insulated from the global volatility because the crops are generally consumed locally within a short time after being harvested. I'm telling you this because we're often confused with others who own farms where the farmers are growing corn, or soy, or wheat. We mostly stay clear of these crops because they have to compete with other countries like Brazil, the Ukraine, where the cost of production, and even after shipping costs, are very low, so they can compete on the world markets against our growers in the United States. Grain prices have been much higher this year as opposed to past years, where they were really low for the last six years.
One reason for that is that Brazil and Argentina are going through a drought period, and the farms in these countries largely depend on rain for water. Now, some parts of the U.S. Southwest are in a very dry period. As you know, almost all of our farms have their own sources of water, even multiple sources. Overall demand for prime farmland growing berries and vegetables remains stable to strong in almost all of the areas where our farms are located, particularly along the West Coast, including most of California, Oregon, Washington, and Florida. Well, they're especially strong these days because we have water on all of those farms. Farmland continues to perform well compared to other asset classes.
Despite some recent downturns in certain regions, the NCREIF Farmland Index, which is currently made up of about $13 billion worth of agricultural properties, has averaged an annual return of about 12.3% for the past 20 years. Compared with, on the other hand, 11% for the overall REIT index and an even lower number for the S&P index. During those 20 years, the farmland index did not have a single negative year, whereas the REIT index and the S&P index each had about four negative years over the time period. Farmland has generally provided investors with a safe haven during turbulent times.
We may be going through some of that now. Both land prices and food prices, especially for produce, have continued to rise steadily. Please remember that purchasing stock in this company is a long-term investment in farmland. I think the investment in our stock really has two parts.
It's similar to gold. It's a hard asset. It's farmland. It's dirt. It's been here for a million years. It has intrinsic value because there's a limited amount of good farmland in the U.S. as well as all over the world. It is being gobbled up. In California, they lose about 50,000 acres every couple of years. That goes to urban development. In Florida, where we have many farms, we have the same problem there. They continue to expand. Unlike gold and other alternative assets, farmland is a very active investment. We get cash flows off of that, whereas in gold, you're just sitting there with the gold.
We're seeing inflation, particularly in the food sector, to increase, and we expect it to increase over time, underlying farmland to increase as a result of that. As we expect this to be especially true in the fresh produce section, and trend more and more toward people in the U.S. eating healthy foods and continuing to grow in that area. Gladstone Land wouldn't be much unless the good people we have operating it, many of them sitting around the table here with me today. Buying and leasing farmland is a very complex business. It's not like buying a stock on the stock exchange. You've got to spend a lot of time with farmers. You've got to have boots on the ground. We've got a lot of them in our West Coast as well as our East Coast.
I'd like you all just to please buy some stock and keep eating fresh fruits, and we'll be in good shape over the next 10 years. I have some questions. If the operator will come on, we'll answer the questions as best we can. Who's up first?
At this time, we'll be conducting a question- and- answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line of Nate Crossett with Berenberg. Please proceed with your question.
Hey, good morning, guys. Maybe you could just speak to the current pipeline a little bit more. I know you guys don't give formal guidance, what are kind of the main puts and takes in the pipeline right now? Is there anything under PSA? I think historically, you've tried to do about $200 million a year. Do you think that's achievable this year?
Well, I wish I could answer that in a better way for you so you could put it into your model and project, where we're going to be at the end of the year. Unfortunately, buying farms is not an easy process. As a result, I can't give you much more than that. How much do you have in your backlog?
We've got about $150 million of deals that we're looking at, in various stages. Not all of those are under signed PSAs. Maybe half or two-thirds of those are under PSAs right now. We're still going through the due diligence process on all of them. Hopefully, we'll be able to close on most, if not all of these, over the next couple of quarters, Q2 and Q3. Of course, no guarantees.
Go ahead. We really don't know what's going on with the government. They're talking about increasing capital gains, which would hit these people. It's talking about reducing how much you can transfer towards your relatives or give away. It's a really unsettling time for us with regard to taxes on people. We're hoping that some people who lose the ability to do a 1031 exchange will take our UPREIT shares. That's a non-taxable transaction in most cases and be enjoying, like you are, dividends coming in every month. Next question.
Yeah. I was going to say, so is the OP unit a bigger part of the conversation when you're working on deals because of all the potential tax changes?
Well, it certainly helped us closing last December, people wanting to get their deal done in 2020 rather than risking with the new administration. I don't know. This new administration could do something silly, like some of the past Presidents have done. If you remember back in the days of some of the Presidents, they would not enact these until about now or later in the summer, but they'd be retroactive back to the 1st of January. You can't plan not knowing what they're going to do. It's just one of those periods of time with a lot of indecision by people of not knowing whether they should do it now, wait, listen, and see what goes on in the next six months. I wish I could be better.
It would help me a lot more if I could be more projection accuracy, but I can't give you more than that.
Okay, that's fine. Maybe you could just touch on pricing trends. I think cap rates of what you've done so far this year is a little bit lower than what you did in 2020. Is there anything that we would note there, or is it just deal- specific? Are you seeing any kind of increased competition?
We haven't seen much in the way of competition. There are people out there trying to buy farms, but they don't have people on the ground. We found the farmers in California and Florida to be very protective of their information and not willing to go out and give it to just anyone. We're a known quantity buying in those areas, so they feel comfortable with us, and I think that will continue. As far as being able to figure out which way the winds are blowing on taxes, I just don't know. I think that will have a big part of determining whether people go with us or just sit tight for the next 10 years. You don't know what a farmer's going to do, but as you know, the average farmer is about 58 years old now.
They don't have any way of getting out of what they're doing without doing something with someone like the farmer next door or us . That's usually what happens. Joe might say to himself, "I'm gonna sell my farm." He tells Ben next door that he's gonna sell his farm. Ben says, "Well, I'd like to buy it." It gets sold that way. It never goes into some kind of listing anywhere. It doesn't have any broker. You've got to have your ear to the ground. You've got to know what's going on in that community, in that growing area, in order to get a shot at it. I think we've now risen to the level in everybody's mind that's out there thinking about selling. We get a lot of inbound calls on that now.
I think we're in a position to grow fast, but I just don't know what people are going to do at this point. I think if the government will determine what they're going to do on taxes, it will help everything come loose, and people will determine what they're going to do. It's a delicate area right now. About half the farms, I think it's 80% or so of the farms, are still in individual hands, and about half of those are not even farmed by the individuals. They're leased out. We love to buy those. We just became the new landlord in those cases. It's been a good way of growing, and it's a little hard to do anything at this point in time in terms of projections.
We just keep hunkering down and working with people, and as time goes on, I think we'll get a lot of opportunities this year.
Okay. Thank you.
Next question.
Our next question comes to the line of Rob Stevenson with Janney Montgomery Scott. Please proceed with your question.
Good morning, guys. I forget how much of your portfolio is appraised in any given year, but within the portfolio, where are you guys seeing the biggest jumps in value on appraisals in terms of geography and crop types?
Rob, we get each property appraised at least once a year. Now, once every three years, we have a full appraisal, and the years in between, we will have desk appraisals, all performed by generally the same groups performing both the full appraisals and the desk appraisals. Lately, we've seen pretty decent jumps in the Salinas, Watsonville area of California. Florida has continued to appreciate at a pretty good pace. The Midwest for us has stayed relatively flat, though, as we continue to get those properties appraised in the next 12 months. If trends continue, that could change. Southern California has been flat to down a couple of percentage points over the past year or so. Those are the main areas we're seeing with jumps.
Okay, that's helpful. Has Gladstone Acquisition made any investments yet? Is there anything in the pipeline that's teed up for them if it closes?
No, we haven't closed yet, and you may know that if you're raising a SPAC, you can't do any negotiations before you get the first tranche of money in. We're sort of sitting on the sidelines waiting for all of these things to clear. The SEC has been involved in the SPAC business pretty heavy-handedly during the last, I don't know, six months. As a result, things have slowed down, Rob, and I don't know when we'll get out on the road and be able to do something. We know some people that want to do a transaction, but we're not talking with them or negotiating as provided by the SEC's regulation.
Okay. In terms of that vehicle, are you anticipating that there's going to be a good size in that? Is that why you just didn't do a taxable REIT subsidiary because you were going to hit a limit there?
Yeah, that's one reason. The second reason is that I'm averse to doing taxable REIT subsidiaries simply because they can end up getting you in trouble. As you know, Rob, if you flunk the test, you can't become a REIT for five years. We've avoided any chance of that kind of nuclear thing going on inside of our company. Our company is big and strong now. There's no reason to take unusual risk, and taxable REIT subsidiaries is that kind of situation. I'm hopeful that we can buy the land and buy the business in the SPAC. That would be the ideal way to do it, because then you would not have the SPAC somehow competing with some of our tenants.
Okay. Lastly, for me, Lewis, a couple of number questions. I don't know if I missed it in your comments, but where did the $2.2 million of other income in the first quarter come from? Is that a one-time thing, or is a portion of that recurring?
It's recurring annually. This is interest patronage or a kind of refunded interest from our Farm Credit loans. I think last year, it's generally recorded in the first quarter of each year. It has increased over the past few years as we secure more loans from Farm Credit. I believe, last year, Q1 of 2020, we had about $1.3 million, and then we had another $300,000 in Q3 of last year. $1.6 million about total in 2020 and $2.2 million this year. It's not recurring quarterly, but we would expect this amount to come in more or less, maybe a little bit higher or lower, depending on the amount of loans we have in Q1 of each year.
Okay. Is there a Q3 corresponding like last year, or is this basically the bulk of it for 2021?
We are not expecting anything more in 2021. Last year, usually, we have all the interest that we accrued during 2020. We'll get a portion of that refunded in Q1 of 2021. Last year, with COVID and everything going on, a lot of certain Farm Credit associations made the decision to pay out a portion of that patronage early. If it wasn't kind of any unique year, that $300,000 would've been received in this Q1 as well. They just paid out the portion early.
Okay. The last one for me, the shares and units outstanding today, given the second quarter issuance, is that roughly $29.5 million, somewhere in that ballpark?
Yep, that's correct.
Okay, perfect. Thanks, guys. Appreciate the time.
Okay. Next question, please.
Our next question comes from the line of John Massocca with Ladenburg Thalmann. Please proceed with your question.
Good morning, everyone.
Morning, John.
Maybe going back to the kind of the valuation on kind of the in-place portfolio. You've seen some pretty good upper momentum in kind of commodity-based farms in the Midwest, particularly. Are you seeing that same kind of upswing in kind of farm valuations for the more kind of fresh produce type farms that make up the bulk of your portfolio?
Yeah, we see that mainly being driven by the desire to lock up farmland. There are people that are growers out there, and they realize if they don't lock it up, they'll miss it. They come in guns a-blazing, and we're able to push the rents up some. You can't push the rents beyond a certain point, or they can't make money. Rent is one of their big costs. As a result, as we've worked with these farmers, not ripping them off has been a very, very smart strategy. We don't push the numbers probably as hard as we could, but quite frankly, we'll get all of that money that we leave on the table over time because we own the property, and they need it to grow fruits and vegetables.
You're right, the Midwest has changed dramatically simply because of the drought in Argentina and Brazil. Those guys can't produce what they produced in past years. Ukraine is doing well, and we're doing okay. Most of the farmers today in the Midwest are selling or have sold most of the things they think they're gonna grow for the year. It's gonna be a very profitable year for people who are growing corn and wheat. I think it may only be for that one year, and then next year, you go back to people competing with each other. If they have a good rainstorm in Brazil, they'll produce a lot of corn. The same thing happens here, and all of a sudden, you've got oversupply and prices dropping.
The prices have gone up dramatically for all of those grains, and I think most of the guys have sold their corn on the exchange. They've gone to the Chicago Exchange and sold two trainloads of this and bushels of that. It's getting to the point where I just don't know if they're gonna be able to produce in the United States what they said they are gonna produce because we're getting droughts and a lot of those farmers that are dry farmers, as I call them, since they depend on rain for the water for their crops. Whereas we're just not in that business. We maybe have 3% of the land we have, and it's usually not essential to our overall what we're doing. As a result, we just don't depend on rain.
We have these big wheels that go around and around in the farms, and we have in the produce area, we have drip farming, and also in the nut business, we have drip farming. Water is as valuable as oil to us. We're in great shape today. Doesn't mean you're gonna be that way in five years, but right now we're in great shape. We're currently working on a transaction where we will buy water that's in the aquifer. They actually trade those things now, we can buy it. You can't get it financed. The banks won't finance water in the ground, but we're gonna buy some, I suspect, just as an insurance policy. Other questions, John?
I mean, just in terms of the price kind of rises we've seen with wheat and some of the other commodities, are you seeing those in kind of the berries or even some of the nuts or any of those kinds of produce that's more typical of what's in your portfolio today? In that kind of same line of questioning, does that impact how you see participation rents going forward?
Yeah, it will impact participation rents. We don't see big changes out there. If you looked at the price of berries that are being delivered in New York, I just looked, and some of the delivery prices out there for the large strawberries are $20- $22 a package that we see. You haven't seen that in a long time. On the other hand, if you're just delivering the same berries that you've delivered in the past, it's still $12, $14, $15. There hasn't been any huge change like in corn, for example. I think corn went from $3.50 a bushel to about $6 a bushel, and so that's a massive change. We haven't seen that in our area simply because we've been steady all along and have been able to deliver berries, blueberries.
In the nut side of the business, almonds have been the biggest area of things going on, as you may know, China buys a lot of almonds. There are a number of almond growers that are fairly large. They dominate the almond industry. As we see that transaction going on, there haven't been huge movements in the price of almonds. I don't think we're in that kind of business where there are big changes, like there is in the valuations that go on with regard to corn and wheat. Those areas are dominated by supply and demand, and if supply is great, prices are very low. On the other hand, if you get somebody who's in trouble like, I don't know, it was about eight years ago, the people in Russia were not able to grow, and so prices went through the roof.
It's a boom or bust kind of situation. It's not a good thing to base your business on if you're doing dividends, monthly dividends to people who want to get their dividend every month, regardless of what's going on in the marketplace. I think we're positioned to do that. I would hate to be in the corn business, although this year is going to be a bonanza, and all of these corn growers are selling on the market and going out and buying a new tractor or whatever. As a result, you're going to see that run through all of the manufacturers. At the same time, you see people jacking up the prices. The GMO, the price of that chemical today is, I know it's up 100%. They're paying through the nose to get that stuff.
We don't do that, so as a result, we haven't had those kinds of problems of cost driving us to jack up the price. Although the price has been up, I think that was mainly because everybody went to the grocery store after the restaurants closed and just started buying everything there. It's come back in line with where they should be today. John, I don't think prices for strawberries and blueberries, and nuts are gonna have a big jump in price. They're gonna continue, however, to be steady so that we know when we're growing strawberries or that we can deliver. I hate to say it this way because it's the wrong way to say it, but all of these migrants that are coming into the country are good for all of the plants that have to be harvested by hand.
Strawberries, in particular, a lot of blueberries are done by hand. As a result, it makes it easier for our farmers to get the kind of people that they need to get the harvest done. I am sure the Apple people are very happy that there's extra people around. That's usually the ones that get hurt the most every year. I think this'll be a good year for apple growers. I don't know. I can't do any more than tell you what prices are today and make some kind of wild guess about what prices will be in six months or a year.
Okay. That's understood. One quick one on the balance sheet. Leverage came down a little bit quarter-over-quarter, obviously, and probably will, kind of quarter to date at this point in 2Q, given you fully funded the acquisition with kind of equity raising on the ATM in 2Q. Is this kind of this a newer, lower leverage level, maybe the run rate going forward? Is some of the activity on the ATM more just kind of creating some dry powder to deploy as more of the pipeline kind of comes to fruition over the course of the year?
What we see going on, it's our judgment of what's going on is best for the company, of course. At this point in time, debt is extremely cheap from Farm Credit and others in the lending business, and we've taken advantage of that. We get 60%-70%, in some cases, of how we're gonna finance our properties. On the equity side, it's been very nice to have sold as many shares as we've sold. Our CFO is dancing around because he's got so much money. Usually, we've been pretty tight. That is, he's praying he doesn't have another closing because he's got money. Right now, he's ready to close, and he's flogging the troops to close deals now that he's got so much cash.
We've been very blessed in terms of being able to sell common stock under the ATM and also to borrow money from our banking group that we deal with, about eight to 10 banks. At this point, we feel very good about it. We have not had a huge run on our non-traded area, so we haven't raised much money there that's at a higher price. We're in great shape in terms of being able to meet any kind of closings that come up, and I think they will.
I think you'll see, if we closed what's in the pipeline and being worked on right now, we'd wipe out all of the cash that we have and have to borrow as well. We've not taken down some debt, in some cases, just because we didn't really need to do that in order to close the deals. We'll be back in the debt marketplace, and the banks and all of those folks seem to be very willing participants in what we're trying to do.
Okay. That answers all my questions. Thank you very much.
All right. Do we have another question?
Yep. Our final question comes from the line of Craig Kucera with B. Riley. Please proceed with your question.
Hey, good morning, guys. Most of my questions have been answered already, but I do want to circle back to a couple. Just first, I'd like to talk about pricing. I think last year you bought at about a 5.5% cap, and I think year-to-date, you've done anything from sort of just inside of a 5% to a 5.3%. As we think about 2021 and the pipeline of assets you're currently looking at, should we expect to see yields that are maybe compressed 25 to 50 basis points throughout the year, or any color there would be helpful.
I don't think so. I think sometimes we run into situations where we have to give a little bit on our standard policy of getting 5.5%. You have to give a little bit in order to get a deal done. Craig, you know how the world works. If you're doing a 10-year lease and it goes up by 1% a year, you may start off at 5%, but as time goes on, it's going to go up. The way the accounting people make you account for that is you have to add up all those 10 years and divide by 10 in order to get the average.
That's what goes into the discussion we're having now, is that number. I think we're in great shape to do that. Also, some of those that may look a little bit low have got some kicker in them someplace.
That is, they participate in the harvest, or they have a repricing at the end of three to five years. Frankly, most of those repricings, I don't know why all of those farmers don't sign up for that because quite frankly, we haven't had that much luck in having farm rents go up by much in repricings. That has to do with the fact that we start off in some marketplaces higher than most. There are people that will, especially a family that no longer farms it and is just counting on that for money coming in, will reprice at 3% cap rates. We compete against them.
There aren't many of those. As time has gone on, we've seen people who own farms end up selling those farms simply because the children of those people who own it don't really want to be in the farming business and don't even want to own a farm, even though it's rented out. How are you going to keep them down on the farm once they've seen cash? I say it's a nice feeling to have a place to go and remember things. Generally speaking, people are selling farms these days rather than keeping them as investments.
Craig, just to add on.
No, it's all right.
I think the lower cap rates for us so far this year are a little bit more circumstantial. We had one sod farm right around 5%, which is kind of norm for that. The facility we acquired, the depressed cap rate in year one was more due to an adjustment on the OP unit issuance price versus the fair value at the time of closing. Excuse me, the olive farm we acquired right after quarter end in April. The year one cap rate of 5.3%, but kind of to what David was talking to with the annual escalations. It's a 15-year lease. Year one negotiation was a bit of a unique circumstance as well, but over the term of the lease, the straight- line rent cap rate is about 6.7%. It's in line with what we're looking at.
I think overall, this year compared to last year, it's not indicative of any decrease in cap rates. It's more region-specific and kind of even more so, just deal- specific.
Got it. No, I appreciate the color. Just one more from me. As we think about how to encapsulate the potential upside from all the participation rents that you have, as you've done more and more leases on that front over the past couple of years. If we're in an environment where, let's say, all of your crops increase 10% in value this year, how does that translate to land? I think last year you did $2.4 million in participation rents. If we did see a nice sort of even increase across the board, what would that mean?
It certainly would mean the participation rents are going up in total number for the simple reason that we have additional farms with participations as part of their lease. You're going to see that as long as we keep adding to it. There haven't been that many places that didn't give us a good return in terms of participation rents in prior years that have gone down. We've got some, but most of them have gone up. If they gave us $2 million last year, maybe it's going to be $3 million or $4 million this year. I mean, that's my guess. We don't know until much later in the season. I mean, people are still planting stuff, so it's really hard to know what's going to happen until you've been in the business for many years, and all of a sudden there's a freeze.
One of our cherry growers lost most of the blossoms on their trees this year. They're not going to have any income. Off of that, I don't think we're going to get much in the way of any kind of added amount out of those kinds of people. We're in so many farms in so many different areas, to try to generalize and say over the entire portfolio X is going to happen, really difficult to do that. My guess is our upside in participation rents are going up for two reasons. One, the one you mentioned, that is, if rents, and sales, and pricing goes up, the participation rents will go up. We participate in that. On the other hand, participation rents, there's just more of them in our portfolio now. We love it.
It sort of saves us some years where we didn't get as much income as we thought, because we didn't start out with as much. This year, we're starting out with a lot more. As you know, we closed a lot last year. Craig, I wish I could help you with your model, but I can't.
That's all right. I appreciate the color anyway. Thanks.
Okay. Anybody else have a question in telephone land there?
There are no further questions at this time. I'll pass the floor back over to Mr. Gladstone for any closing comments.
Okay. Thank you all for calling in. Maybe next time you'll have a lot more questions for us, and we can have more fun answering them. Thanks for calling in. That's the end of this call.
This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation, and have a wonderful day.