Greetings, and welcome to the Gladstone Land fourth quarter and year-end earnings conference call. At this time, all participants are in a 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Gladstone, Chief Executive Officer and President. Thank you. You may begin.
All right. Thank you, Jesse. It was a nice introduction. This is David Gladstone, and welcome to the quarterly and annual conference call for Gladstone Land. Thank you all for calling in today. We appreciate you taking time to listen to our presentation. We're gonna start out with Michael LiCalsi. He's our General Counsel and Secretary, and he's also President of Gladstone Administration, which is the administrator for all of the Gladstone funds. Michael, you wanna go?
Sure. Thanks, David, and good morning, everybody. Today's report may include forward-looking statements under 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. The 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 the Risk Factors in our Form 10-K and other documents that we file with the SEC. You can find those on our website, which is www.gladstoneland.com. Specifically, go to the investors page or on the SEC's website, that's sec.gov.
Now, 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. Now, today we will discuss FFO, that's funds from operations. Now, 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. Now, we may also discuss Core FFO, which we generally define as FFO adjusted for certain non-recurring revenues and expenses. Also, Adjusted FFO, which further adjusts Core FFO for certain non-cash items, such as converting GAAP rents to normalized cash rents. Now, we believe these are better indications of our operating results and allow you to better compare our performance period over period.
Now, we ask that you take the opportunity to visit our website. Once again, it's gladstoneland.com. Sign up for our email notification service so you can stay up to date on what's going on at 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-K, both issued yesterday, for more detailed information. You can find them on the investors page of our website. Now, with that, I'll turn it back to David.
Okay. Thanks, Michael. I'll start with a brief summary of our current farmland holdings. We currently own approximately 113,000 acres on 164 farms and about 45,000 acre feet of banked water, valued, all of this together, at about $1.5 billion for the land and the water. Our farm is located in 15 different states and more importantly, it's in 29 different growing regions. These growing regions determine just about everything about the farm and its ability to grow. Our farms continue to be 100% occupied and are leased to 85 different tenant farmers, all of whom are unrelated to us. The tenants on these farms are growing over 60 different crops.
Given the number of different growing regions, tenants, farms, types of crops, I think there's sufficient diversification to provide safety and security for the cash flows coming in from the rents. We believe this diversification helps protect dividends that we pay to our shareholders. We had another active quarter for the year ending 2021. For the year, we had $294 million of new acquisitions. About half of these, or $147 million, came during the fourth quarter. While this is a good year from an earnings perspective, we didn't get to see as much of an impact from the acquisitions in 2021. We're looking forward to reporting what we hope are even stronger results in 2022. We had a good year in terms of participation rents. In fact, it was a fantastic year.
We recorded about $3.4 million in additional income during the fourth quarter. This resulted in us recording total participation rents of about $5.2 million for the year, which was more than twice the amount recorded in each of the prior two years. This increase was largely the result of participation rents and their components on certain farms becoming active for the first time in 2021. We have a few more farms with participation rents that are scheduled to come online in 2022, so we should see a little bit of a bump there. However, we're not yet able to estimate the amount of the participation rents for 2022, as these numbers are largely dependent upon the yields achieved on the farms and the prices of the crops that are sold.
We'll need to wait until later in the year before we can announce any of these figures. We continue to be able to renew all expiring leases without incurring any downtime on any of our farms, the farms in our primary region of focus, that is, each of the coasts. As you know, we're very heavy in California and Florida. We continue to execute renewals at high rental rates. We charged the lease structure up from one of our farms in the Midwest, which was resulting in lower amount of rent recognized up front, and I'll go over that in a bit. Overall, operations on our farms remain strong and the demand for products grown on most of these farms remains high.
These are products like berries and vegetables and nuts, and as anybody who goes to the grocery store can tell you, prices on these and many other types of food continue to increase. We are going through inflation, with regard to the crops that are on these farms. During the fourth quarter, the team acquired seven farms, about 20,000 acre feet of water, banked water. This is a total of about $147 million that we spent for all of that. Overall, the initial net cash yield to us on these acquisitions is about 5%. In addition, all the leases on these farms contain certain provisions such as participation rents or annual escalations that should push the figure higher in the future. As a reminder, this banked water is water that we own. However, it's stored in a water district.
We can use the water on any of the farmland located in Kern County, that sub-basin that they have there, where we have several farms, or we can sell it to third parties on the open market. Our plan is to hold the water to help us safeguard our assets in the region against any future water shortages. All of our farms currently have enough water, but we like the security of having extra water. On the leasing fronts, since the beginning of the fourth quarter, we executed 10 leases, we renewed on properties located in four different states. Overall, these renewals are expected to result in a decrease in the annual net operating income of about $138,000 from the prior leases.
However, this decrease is really the result of one lease renewal on one property in which we invested $560,000 to cover a portion of the farm's operating cost in exchange for additional significant participation rent components to about 80% of the gross revenue earned on that farm. We did that because the farm needed some additional help. Based on the current commodity prices and yield estimates, we think we will at least end up similar to where we would have been under the previous lease on this farm. Maybe even better if the farmer has a good year. We'll not know the results until the end of the year for this deal that we did.
Excluding this one lease, our other lease renewals are expected to result in increases in annual net operating income of approximately $247,000 or about 8% over that of the prior lease. Looking ahead, we only have one lease scheduled to expire over the next six months, and it makes up less than 0.5% of our total annualized lease revenue. We're in discussions with the existing tenant on the farm, as well as some of the potential new tenants, and we aren't currently expecting any downtime. We currently expect the new lease on this farm to be relatively flat from where it is today. There are a couple of items I'd like to mention before we move on. The first one is the ongoing drought in the West.
They're still having a problem with water, even though I think they got some additional water in this last round that was out there. Despite some recent record-breaking rainfalls in parts of the Western U.S., the entire region continues to deal with the drought. However, all of our properties continue to be positioned where they currently have water to complete at least the current crop and most likely all the other crops that they're gonna grow in the next six-nine months. Where we have farms located in water districts, those districts have stored water or other supplemental sources to cover our farms for the short- term. Almost all of our farms out west have wells on the site, and most of them rely on groundwater as their main source of irrigated water.
For these properties, we are seeing the typical seasonal dropping of the water levels, but not enough to make us upset. One thing you should know is that wet and dry weather cycles are the norm out West, especially in California. Throughout any long-term investment, we know that we will have both drought periods and wet periods. When we underwrite a potential investment out West, we look for properties with multiple sources of water. We build in a drought scenario, and we also take into account potential government regulations. Regarding the progress on our ESG policy, we continue to work. We have a nice list now of things that would go into our ESG disclosure. We'll continue to update you on this as we get closer to finalizing these policies.
As mentioned on previous calls, we sometimes come across farmland owners who want to sell both their farmland and their operations. As a real estate investment trust, Gladstone Land is limited to the ability to operate, own operating companies because operating income is generally not permitted in a real estate investment trust. The Gladstone Acquisition SPAC was created to potentially take advantage of these opportunities where Gladstone Land could not participate. I'll stop here. That's enough on the operations. I'll turn it over to our CFO, Lewis Parrish, who will talk to you more about the numbers. Lewis?
All right. Thank you, David, and good morning, everyone. To begin briefly with our balance sheet, during the fourth quarter, our total assets increased by about $90 million due to new acquisitions. These were financed with a mix of debt and equity proceeds. From a financing perspective, since the beginning of the fourth quarter, we've secured about $31 million of new long-term borrowings at a weighted average rate of 3.4%, which is fixed for the next 9+ years. On the equity side, since the beginning of the fourth quarter, we've raised about $49 million in net proceeds through sales of our common stock under the ATM program and about $35 million in net proceeds from sales of our Series C preferred stock. Moving on to our operating results.
First, I'll note net income for the fourth quarter was about $2 million, and net loss to common shareholders of $1.4 million, or $0.042 per common share. For the year, we had net income of about $3.5 million and a net loss to common shareholders of $8.7 million, or $0.286 per common share. On a quarter-over-quarter basis, adjusted FFO for the fourth quarter was approximately $6.7 million, compared to $5.3 million in the third quarter, an increase of about 28%. AFFO per share was $0.199 in the fourth quarter versus $0.166 in the third quarter, an increase of 19%.
Dividends declared per share were about $0.136 in the fourth quarter versus $0.135 in the third quarter. Annual basis, Adjusted FFO for 2021 was approximately $20.4 million compared to $14.3 million in 2020, an increase of 42%. AFFO per share was $0.668 in 2021 versus $0.641 in 2020, an increase of 4%. The year-over-year increase in the per share figures were a bit muted due to an early lease termination fee received during the first quarter of 2020, which resulted in additional AFFO of about $0.10 per share last year. Dividends declared per share were $0.541 in 2021 and $0.537 in 2020.
Our common dividend payout ratio was about 81% of AFFO in 2021 versus 84% in 2020. The primary driver behind the increases in AFFO was higher top-line revenues, partially offset by increases in related party fees and additional borrowing costs. Fixed-base cash rents increased by about $1.2 million, or 7% on a quarter-over-quarter basis, and by about $17.6 million, or 35% on a year-over-year basis. These increases were primarily driven by additional revenues earned from recent acquisitions. As David mentioned, during the fourth quarter, we recorded about $3.4 million of participation rents compared to $1.8 million in the previous quarter. For the year, that gave us participation rents of about $5.2 million versus $2.4 million last year.
During 2021, we had 39 farms under leases that had an active participation rent component, versus 19 farms during 2020. We do have a few additional farms with participation rent components that are scheduled to come online later in 2022. On a same-property basis and including participation rents, but excluding income from early lease terminations, our 2021 lease revenues increased by approximately $2.3 million, or 4.5% over that of 2020. On the expense side, excluding reimbursable expenses and certain non-recurring or non-cash expenses, our core operating expenses increased by about $679,000 on a quarter-over-quarter basis and by about $3.6 million on a year-over-year basis. These increases were both primarily driven by higher related party fees.
The base management fee paid to our advisor increased due to additional assets acquired during the year, while the increase in the incentive fee was driven by higher pre-incentive fee FFO achieved during each of the current periods. Removing related party fees or core operating expenses decreased by about $256 thousand on a quarter-over-quarter basis and increased by about $652 thousand on a year-over-year basis. Decrease on a quarter-over-quarter basis was primarily due to less water costs incurred on one of our properties in Colorado, partially offset by additional legal fees incurred to protect water rights on certain farms in California. Increase on a year-over-year basis was primarily due to the additional water costs incurred on these Colorado and California properties, an increase in property tax expenses due to certain recent acquisitions and changes in certain lease structures.
Just one last note on expenses. During 2021, we incurred approximately $572,000 of additional water costs related to the Colorado property. We do not expect these costs to continue into 2022. Additionally, we recorded about $282,000 of costs related to protecting our water rights on certain farms in California. We do currently expect these costs to continue at similar levels for the next few years. Moving on to net asset value. We had 24 farms and one cooling facility revalued during the quarter, all based on third-party appraisals. Overall, these farms increased in value by about $2.1 million over their previous valuations from about a year ago.
As of December 31st, our portfolio was valued at about $1.5 billion, and all of this was supported by either third-party appraisals or the actual purchase prices. Based on these updated valuations and including the fair value of our debt and all preferred stock, our net asset value per common share at December 31st was $14.31, which is up by $0.51 from last quarter. Turning to our capital makeup and overall liquidity. From a leverage standpoint and with respect to our borrowings, our loan-to-value ratio and our total farmland holdings on a fair value basis and net of cash was about 44% at December 31st.
Over 99% of our borrowings are currently at fixed rates, and on a weighted average basis, these rates are fixed at 3.36% for another six years. We believe we are currently well-protected on the debt side against any future interest rate hikes. Regarding upcoming debt maturities, we currently have about $65 million coming due over the next 12 months. However, about $48 million of this represents various loan maturities, and the properties collateralizing these loans have increased in value by a total of about $24 million since their respective acquisitions. We do not foresee any problems refinancing any of these loans if and when we choose to do so.
Removing these maturities, we only have about $17 million of amortizing principal payments coming due over the next 12 months, or about 3% of our total debt outstanding. From a liquidity standpoint, including availability on our lines of credit and other undrawn notes, we currently have about $115 million of dry powder in addition to over $35 million of unpledged properties. We recently increased the size of our MetLife facility. This now gives us ample availability under each of our two largest borrowing facilities, and we also continue to reach out to new lenders for additional borrowings. Overall, credit continues to be readily available to us from multiple lenders. Finally, I'll touch on our Common Distributions. We recently raised our common dividend again to $0.0453 per share per month.
Over the past 28 quarters, we've raised our common dividend 25x , resulting in an overall increase of 51% over this time. Since 2013, we've paid 108 consecutive monthly dividends to common shareholders, totaling $5.52 per share in total distributions. Our goal is to continue to increase the dividend at regular intervals. When considering the relative stability and security of the underlying assets and the related cash flows, we continue to believe that this stock offers a compelling investment alternative, particularly in light of today's inflationary environment. With that, I'll turn the program back over to David.
Okay, thank you, Lewis. Nice report. Acquisition activity remains good for us, and we continue to see buying opportunities coming our way. Just a few final points, I'd like to make before we get some questions. We believe that investing in farmland, growing crops that contribute to healthy lifestyles, such as fruits and vegetables and nuts, follows the trends that we're seeing in the marketplace today. Overall, demand for prime farmland growing berries and vegetables remains stable to strong among all of the areas where the farms are located, particularly along the West Coast, including most of California, Oregon, and Washington, and the East Coast, especially in Florida and some other states. Overall, farmland continues to perform well compared to other assets.
The NCREIF index, I mention this often because NCREIF is the farmland index which currently makes up about $13.8 billion worth of agricultural properties in the United States and has an average annual return of about 12.6% over the past 20 years, with no negative years during that period. This is equal to that of the overall REIT index and higher than the S&P index, both of which had four negative years over that time period. In closing, please remember that purchasing stock in this company is a long-term investment. It's a slow-moving piece of machinery that makes money day in and day out. I think an investment in our stock really has two points. First of all, it's similar to gold in that it's hard assets. I mean, this is dirt. It's been there for centuries, maybe even longer.
It has an intrinsic value because there's a limited amount of good farmland, and it's being used up by urban developments, especially in California and Florida. We have many farms in those areas, and at one point in time, somebody will show up and will buy one of our farms so they can build houses on it. Second, unlike gold and other alternative assets, it's an active investment asset, has cash flows to investors, and we believe that's better than a bond fund because we keep increasing the dividend. We expect inflation, particularly in the food sector, to increase, and we expect the values of underlying farmland to increase as a result. We expect this is especially true for the fresh produce food sector and the trends of more people in the U.S. eating healthy foods continues to grow.
Now we'll have some questions from those who follow us. Operator, if you'll come on and tell them how they can ask some questions.
Absolutely. Ladies and gentlemen, if you would like to ask a question at this time, please press Star one on your telephone keypad. The confirmation tone will indicate that 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 is coming from the line of Edward Reilly with EF Hutton. Please proceed with your question.
Good morning, guys.
Good morning.
Morning.
Hey, you guys really deployed an impressive amount of capital in the fourth quarter. Do you think you could speak to the state of the current pipeline and maybe give us some information on how much capital you think you may be able to put to work next year? You know, it seems year-over-year, you're continuously deploying more and more capital. Do you think that trend will continue?
We're hoping so. We've, as you know, in 2019 and 2020, we had about $250 million of acquisitions in each year, close to $300 million, $294 million this year. Each of the years do tend to start off slowly. I know we had more than $100 million, I think close to $200 million of acquisitions in the fourth quarter last year. It's close to $150 million this year. It takes us time in the beginning of the following year to kind of replenish the pipeline that we've depleted in the fourth quarter. We're seeing that right now. We do have deals that we're looking at. They're in various stages.
Hard to say what we'll do for the year right now, but I mean, internally, we do kind of pencil in a target between $200 million-$300 million. Understanding that's a pretty wide range to pencil in, but it kind of just all depends on the opportunities that we see and which ones fit our investment criteria. Right now we have between two and five deals that are kind of beyond the initial review stage that we're looking at. Not sure if we'll get anything closed in Q1, but hopefully by early Q2, we'll have something to announce.
Okay, great. What sources of capital do you plan on drawing from to fund these new deals?
Well, right now with the availability on our line of credit, the MetLife facility and certain other loans that we've closed but have not drawn on yet, since we don't have an immediate need for the cash, we have $115 million of dry powder that we could deploy today. That's not even leveraged, so divided by, you know, with the 6% LTV, that gets us close to $300 million worth of acquisitions. We also have $35 million of unpledged properties. So that would be the first source. But anything beyond that, we do have the Series C sales that are continuing to come in strong. We have availability under our common ATM that we've made very good use of during 2021.
I think we sold a little over $170 million worth. That price remains very attractive for us. Of course, additional borrowings when we do need those as well. We have plenty of sources of funding right now.
Awesome. Could you remind me of the interest rate on the line of credit?
It has a floor of 2.5%, and that's where it's at right now. It's LIBOR+ a spread of 2%.
Okay. Gotcha. I'm curious to kind of know what was impacting the operations of the farmer in the Midwest whose operating expenses you guys have chosen to cover in exchange for participation rents. What sort of problems was that farmer seeing?
We had one farmer that was leasing two farms from us. This farmer was getting into bankruptcy, so we were releasing him from the lease and bringing on a new tenant. One of the farms, the new tenant we were bringing on, he was very familiar with, and he was confident enough to sign a long-term lease with us. The other one was relatively new to him, so rather he wasn't comfortable signing a long-term lease on that farm. What we did was, we just did a one-year lease where we'll front him the majority of the operating costs, a fixed amount, and in return, we will get a large majority, 80% of the gross proceeds on the farm at the end of the year.
As you know, commodity prices are very strong right now. We're confident in the farmer's ability and the yields that are possible on this farm. We think we're going to come out ahead, but of course, no guarantee of that. At the end of this first lease year, hopefully this tenant will become more comfortable with the farm, and we'll be able to sign up a long-term lease with him at the end of the year.
Great. Just to confirm the increase in operating expenses, I believe you guys said $560,000. Is that right?
Yeah, that was the fixed commitment that we gave to this new tenant. Yes.
Got it. Finally, could you give us an update on the SPAC regarding any potential developments there? Also congratulations on the new IPO for the asset management firm. Would love to kind of hear some of their objectives as well.
Hard to talk about other funds during this conversation, but quite frankly, we've got some opportunities, and we're gonna try to get those done soon so that the SPAC can get funded. No guarantees, it's always hard to get those things done and much harder than we ever thought it was gonna be, the reasons for getting in that business. Right now, the SPAC is cruising along, and we're hopeful that we'll have something to announce in the next, I don't know, 60 days. As far as the rest of the companies, they're all doing extremely well. If you looked at each of our four public companies, they are doing extremely well, including this one of course.
Okay, great. I don't want to hog the line, so I'll turn it over to other analysts. Thank you, guys.
Thank you. Our next question is coming from Craig Kucera with B. Riley Securities. Please proceed with your question.
Yeah. Hey, good morning, guys. Wanted to talk first about variable rents. Clearly a pretty major increase year- over- year. This may be a tough question to answer, but if you were to take a guess, how much would you attribute to food inflation versus maybe rolling out an increasing number of leases with the variable rent component?
You're right. That is a difficult question to answer. We can definitely say that certain crops gave us a better return than others. Pistachio pricing, for example, that was very high for us. The yields were good on those farms. Almond pricing for conventional pricing was down a little bit this year, so that was slightly offset. But the majority of our revenues for 2021 were coming from the pistachio crop. I know that doesn't exactly answer your question, but I think that might be the best we can do right now.
No, that's helpful. I appreciate the color there. And circling to kind of the water issues that you had at a few farms, whether that's in Colorado or in California, which you're expecting to be a little more sustainable. Is that influencing how you're thinking about underwriting? Are those types of considerations increasingly coming into the market in regards to pricing?
I think everybody who buys a farm is looking at the water very carefully. California goes through good times and bad, and it's sort of in the middle right now, and it may get worse, and it may get better. We seem to be in a good position to handle either one of those. They thought the snowpack in the mountains was gonna be much bigger than it is today, but it didn't quite live up to that. We're supposed to get some more rain out that way, but it's if you're in the business that we're in, you're constantly looking at the weather to determine whether the water is coming in from the ocean side as the.
All of the things that are going on out there and coming across the part of the business that is unbelievably difficult to predict is the weather. I now have much more affinity for the people who are trying to forecast weather because we have no way of really knowing what's gonna happen. Although over the years, I've been at it now about 20 years, and we seem to come out okay every year. I'm hopeful that we do the same thing this time. Our guys who run stuff in California, and especially in Oxnard as well as Watsonville, are all looking at the weather machine that's out in the ocean and trying to guess which way it's gonna go and how much water is coming in.
It's a risk, but generally speaking, the people out there get by, and almost all of the farms have wells that have enough water to do the job of growing our crops. It doesn't mean that they'll always have it, but they do today. I'm grateful that we can continue to do what we're doing. We don't have that kind of problem in Florida, and so we like Florida for that reason, is that the water tables are high and it's easy for us to figure out what kind of water we're gonna get in Florida. We'll just keep pedaling along and trying to get the right farm. The good news is that you have a history on virtually every farm.
I mean, I tracked some of those farms when I was buying early back in the 1930s, and they were growing turnips at the time. It's changed every year since then in terms of what you plant and what you decide to do with that farm.
Got it. Lou, changing directions, you know, you typically book the vast majority of your interest patronage in the first quarter. Can you give us a sense of how you're thinking about that in 2022?
Internally, we usually pencil in a similar amount as the prior year. We do believe that to be conservative because every year we do have additional loans from Farm Credit. You know, if the payout ratio or percentage stays the same, then we should have more. As you know, these amounts are never guaranteed. It theoretically could be zero from any given association. We think that's a remote possibility, but we don't really know it until they announce it. We've only been told by one association so far about the payout, and it came in as expected. We have 13 different associations we borrow from, so there's still a lot more information to come.
I will say, I think last year in total, we recorded, I think it was $2.5 million of patronage. $300,000 of that was a prepayment of interest patronage due to kind of the growers' difficulty with COVID. I would all else being equal, it may not come in quite as high as last year. I think about $2.2 million was a regular payout, $300,000 was additional. So we're expecting somewhere in that range. But it again, we won't know until another month or two out.
Got it. Just one more from me. You know, I feel like a year or two ago, you were raising rents pretty aggressively. The farm economy was really going, you know, quite well. This is the first quarter, obviously, for, you know, more of an anomaly. You had a pretty decent rent roll down, you know, subsequent to the year-end. I guess I'd be curious as to, as you think about the other leases expiring this year, you know, just the ability of farmers to kind of push through maybe some of their higher operating costs, such as fertilizer or some of the other components of the business.
Well, keep in mind that the roll down from the 2022 renewal so far is really just that one anomaly, that one lease where we fronted the expenses. If you take out that one lease, our other leases renewed in 2022 have increased by about 5%. Maybe not as high as the 8%-10% that we had in the prior years, but it's only been a couple of farms that we've renewed so far this year. On the farm that we did take the rolldown from, we are expecting to recoup all of that, or at least the majority of it, if not all, and then some at the end of the year when the crop share numbers do come in.
We think at the end of the day, we'll be okay with that farm. The rolldown is. I just wanna point out that the rolldown is really a function of that one change in lease structure. We only have one lease coming due over the next six months. We do expect that lease to be pretty flat to where it is right now. We have a few more leases expiring in the latter half of the year. We've begun negotiations, but it's too early to give an estimate on that. We don't currently foresee any significant rolldowns in any of those.
Okay. Thanks. I appreciate it, guys.
Thank you. As a reminder, if you would like to ask a question at this time, please press Star one on your telephone keypad. Our next question is coming from the line of James Villard with Ladenburg Thalmann. Please proceed with your question.
Good morning, guys.
Good morning.
Can you give us some more color on, I guess, what you're seeing for cap rate outlook as you kind of get started in 2022?
I don't think there's any big change coming in cap rates. There's some things going on in the marketplace today, of course, that may change everything with all of the inflation that's going on, but that hasn't hurt us in the past, so I don't expect it to hurt us now. Cap rates should remain in the 5%-5.5% for good solid properties, and that's where we play.
Yeah. Just one more thing. I guess, as you kind of highlighted with the weather issues that you mentioned, does it have any impact, I guess, on participation rents? Is it something that just happens every year that you just kind of bake in, or is it more of a one-time thing?
Well, it's one of those variables based on weather, and it's really hard to forecast the weather. As a result, I don't think there's gonna be much of a change in terms of the way that we do business. I'd love to find a way to cover it. If you could find some insurance for weather, it would be nice. Nobody's insuring the weather. We're at the mercy of the weather gods and don't know where we're gonna get what, but it just seems to work out every year.
Yeah. Thanks for the answers. I appreciate that. That's all for me.
Okay. Next question.
Once again, ladies and gentlemen, to ask a question, please press Star one on your telephone keypad. It appears we have no additional questions at this time, so I'd like to pass the floor back to management for closing remarks.
Okay. Thank you very much. I appreciate everybody calling in, and we'll see you next quarter. That's the end of this call.
Ladies and gentlemen, this does conclude today's teleconference and webcast. Once again, we thank you for your participation, and you may disconnect at this time.