Farmland Partners Inc. (NYSE:FPI) Q4 2021 Results Conference Call February 23, 2022 11:00 AM ET

Company Participants

Paul Pittman - Chairman & CEO
James Gilligan - CFO and Treasurer
Luca Fabbri - President

Conference Call Participants

Rob Stevenson - Janney
Dave Rodgers - Baird
Buck Horne - Raymond James
Craig Kucera - B. Riley Securities
Ryan Watson - Medium Investment Advisors

Operator

Good morning, ladies and gentlemen. Thank you for attending today's Farmland Partners Fourth Quarter 2021 Earnings Conference Call. My name is Sian, and I will be your moderator for today's call. All lines will be muted during presentation portion of the call with an opportunity for questions and answers at the end. [Operator Instructions]

I would now like to turn the conference over to your host, Paul Pittman from Farmland Partners Incorporated. Please proceed.

Paul Pittman

Thank you, ma'am. Good morning and welcome to Farmland Partners fourth quarter and full year 2021 earnings conference call and webcast. We appreciate you taking the time to join us for these calls.

I'll now turn the call to James for some customary remarks. James?

James Gilligan

Thank you, Paul. The press release announcing our fourth quarter and full year earnings was distributed yesterday afternoon. The supplemental package was posted to the Investor Relations section of our website under the sub-header presentations and other materials, yesterday afternoon as well. For those who listen to the recording of this presentation we will remind you that, the remarks made here as of today, February 23rd, 2022, and will not be updated subsequent to this call.

During this call, we will make forward looking statements, including statements related to the future performance of our portfolio, our identified and potential acquisitions and dispositions, impact of acquisitions dispositions and financing activities, business development opportunities, as well as comments on our outlook for our business, rent and the broader agricultural markets.

We will also discuss certain non-GAAP financial measures, including net operating income, FFO, adjusted FFO, EBITDAre and adjusted EBITDAre. Definitions of these non-GAP measures as well as reconciliations to the most comparable GAAP measures are included in the Company's press release announcing fourth quarter and full year earnings, which is available on our website www.farmlandpartners.com and is furnished as an exhibit to our current report on form 8-K dated February 23, 2022.

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

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

Paul Pittman

Thank you, James. So, I'm going to make just a few minutes of comments, really about kind of two broad topics, performance of the Company itself, although I'll let James and Luca go through a little more detail later in the call, and then also the general market conditions for Farmland in particular and the Ag economy generally.

So I want to start by saying, I think this really was a outstanding quarter operationally for the Company. We had about 12% year-over-year revenue growth and about 17% year-over-year operating income growth, if you compare fourth quarter of 2020 to fourth quarter of 2021. The full year results were also very, very strong when compared to 2020. If you set aside the expense that we had for the ongoing litigation with Quinton Mathews and Saberpoint and with the class action suit associated with that.

We've got our AFFO per share up 74% from the 2020 year to the 2021 year. As I mentioned briefly, we still have the financial drag that comes from the litigation related to the short-and-distort attack. But based on recent news reports, it appears that the Department of Justice is actually investigating some if not all of the parties involved in the attack on our company as well as attacks on other companies. So maybe after three or four years, we will finally reach a positive result in those litigations.

If you look at rent renewals turning back to operational matters for a moment, the rent renewals that we did in the 2021 year were very, very strong. And we think they will be similarly strong in 2022. Each year, we renew about a third of the row crop portion of our portfolio and that fixed cash rent portion of the portfolio, which is almost entirely primary row crops is about 70% of our overall revenues, about a third of that is renewed every year. What we renewed in 2021 was up 10 and a half percent. The benefit of those increased rents really shows up in the 2022 financials. You'll see some of that when James talks about guidance.

The renewals we will do this year in 2022 are likely to be at even higher increases than those we saw in 2021. And again, we'll renew about a third of the fixed rents this year. If you look at the -- turning to the market for farmland and the farm economy generally, land values on a nationwide basis, but especially in the corn-belt are going up very, very rapidly. This is the strongest farm economy since the 2012, the 2014 era that we've seen that showing up in grain prices, land prices, the input prices, frankly, arising the entire sector of production. Agriculture is in a very, very strong period and in our view likely to stay in that very strong period for probably another couple of years, at least.

Absolute increases in land values I've seen statistics as high as 35 or 40% increases. I frankly think that's probably a little overdone, but I certainly think land values across the board our portfolio included in the core of the corn belt are up something like 15 to 20% year over year, and maybe even more. If you show up at an auction in the Midwest today, you will often see a farm sell for $17,000 or $18,000 an acre and the auction might conclude in a matter of minutes. It really is strong. 75% of the purchases are being done by farmers. This is not a speculator driven boom in farmland. This is a farmer driven boom, as it should be.

And that's really based on the strong profitability last year and the outlook for the strong profitability in the coming couple of years. That profitability is largely due to significant increases in grain price, but also continued increase in yield and farming efficiencies. The grain price is very, very strong for a handful of sort of fundamental reasons. First and always the most important in the long-term is the period of relatively low commodity prices we experienced in '15, '16, '17 clear into the summer of 2020 led to rapidly increasing demand for many of those commodities.

And you've created a new fundamental demand base that is still growing. And then all of a sudden hit some scarcity with weather hiccups in certain regions in the world, and prices have jumped dramatically. That strong pricing is likely to stay in place almost certainly in the 2022 year because the South American crop and corn and soybeans is suffering significantly due to weather, they're reducing the expectation of output from the south American harvest. And that primary harvest in South America is going on as we speak.

The other thing going on, of course, in terms of the supply side is the growing crisis in Ukraine and Russia. That is an important grain growing region in the world. And of course, there's a significant risk that those commodities may not be grown and may not be exported at the same quantity they have been historically. And then finally, you haven't begun the season yet here in the United States, and there's some level of a weather and risk premium being built into the market.

The obvious question is, well, how long will this go on? I think it will go the strong grain price and therefore farmer profitability is going to last through '22. I believe, although not with is higher degree of certainty but it will last through 2023 and maybe beyond. It really isn't just a supply question. It's a supply issue in the face of rapidly increasing demand frankly for all the uses of the primary grains. Oil prices are back up that leads to significant ethanol demand. There's ever increasing amount of acreage producing soy for biodiesel in the United States. And then of course, food and feed demand continues to grow over time.

An additional tailwind to farmland as an asset is inflation, we certainly have seen inflation. My own bias is that we will continue to see inflation for a period of time at least probably the rest of this year, if not longer. I think it's a little hard to tame once it gets started. That has historically been a big, big driver of farmland values. Farmland is an excellent hedge against inflation. And I think we're going to continue to be a beneficiary of that.

So, I'm going to turn it over to Luca to make some additional and slightly more detailed comments. And then, I'll come back during the Q&A and probe any questions people have a little bit more deeply.

Luca do you want to take over and talk a little bit about specific operational performance in some regions and the portfolio generally.

Luca Fabbri

Thank you, Paul. Today, there are three ideas that I would like to cover with my comments. First and foremost, I would like to build on Paul’s point of recovering operating performance in our portfolio, specifically with focus on California, permanent crops, while our agriculture was not impacted nearly as much as any as most other industries throughout the COVID pandemic. In 2020, there were some specific crops that were indeed affected by the pandemic. For example, the bar trade had dramatically lower demand for citrus lemon in particular, and we saw that impact in our financial. Also in 2020, there were some trade disruptions that affected our returns. We have seen a strong recovery in those crops in 2021 over 2020, and as reflected in both variable rents as well as the gross margin in the directly operated farms in our portfolio.

The second point I would like to address is, our acquisition and disposition activity. During 2021, we made 12 acquisitions totaling $81.2 million and 20 dispositions totaling $73 million, across the board. So this will appear a very, very modest increase in our portfolio size. But specifically, I would like to point out that of the $73 million in dispositions, $21.5 million were to the Opportunity Zone Fund that we manage and therefore those farms that we sold to the Opportunity Zone Fund continue to produce revenue for us through our management fee in OZ fund. And secondly, we have -- in this acquisition and disposition activity that we continue to do at the margin of our portfolio really continues to gradually improve cap rates in those specific farms.

Finally, I would like to address another important event for us in 2021, which is the Series B conversion that took place in the fourth quarter. At the beginning of the fourth quarter, it de-levered our balance sheet, it increased our common equity without underwriting discounts, so underwriting fees. It was overall an instrument that gave us great access to capital at the time when common equity was not a viable avenue for us to raise capital. The common equity price -- the common stock price between the time when we issued the Series B and we converted it, increased by 45%, but most importantly, this Series B conversion is creative to AFFO and cash flow in general. And in the fourth quarter of 2021, we just started to see the positive impact of the conversion, which will be of course magnified in the full year of 2022.

With that, those were my comments for today, and I will now turn the call over to James to cover some financial highlights, containing our earnings release and supplemental. James?

James Gilligan

Thank you, Luca. I'm going to refer to the supplemental package in my comments. As a reminder, the package is available in the Investor Relations section of our website under the sub-header presentations and other materials. Pages 1 to 10 of the package contain the press release and related financial information and pages 11 through 20 contain the supplemental information.

First, I will share a few financial metrics that appear on pages 2 and 3 for the 12 months ended December 31, 2021. Net income was $10.2 million compared to $7.5 million for 2020. Adjusted for litigation net income was $18.5 million compared to $10.2 million for 2020. Net income per share available to common stockholders was negative $0.17 compared to negative $0.18 for 2020.

Adjusted for litigation net income per share available to common stockholders was positive $0.06, compared to negative $0.01 for 2020. AFFO was $0.4 million compared to $1.8 million for 2020. Adjusted for litigation AFFO was $8.6 million compared to 4.5 million for 2020. AFFO for diluted weighted average share was $0.01 compared to $0.06 cents for 2020. Adjusted for litigation AFFO per diluted, weighted average share $0.24 compared to $0.14 for 2020. Total debt at December 31, 2021 was 513.4 million. Fully diluted shares as of today are 47.0 million.

Next, I will draw your attention to supplemental information on page 13. At the bottom of the page, you can see a graph of debt maturities by year. Earlier this month, we completed the extension of our $112 million debt facility with Rutledge and Farm Credit. We extended term five years to 2027. The graph shows the pattern bar shifting from 2022 to 2027. The price changed from LIBOR plus 1.3% to SUL4R-PLUS a grid of 1.8% to 2.25% with initial spread of 1.95%. While we are disappointed to see the spread increase, the new pricing is still in line with market and we are pleased to continue the partnership with Rutledge and Farm Credit.

Next, I will turn to page 14 to provide an overview of our income statement. Let me take a minute to talk to the table at the top of the page. We have over 300 farms in the portfolio, many of which have multiple revenue streams. We try to simplify the business into a few baskets described in this table. We start with fixed payments. Fixed payments include fixed farm rent, wind rent, solar rent, recreation rent, tenant reimbursement, management fees and interest income on loans. We consider these fixed payments to be low risk. Fixed farm rent represents the vast majority of fixed payments.

As a point of information, farmers generally pay 50% of a hundred percent of fixed farm rent before planting mostly in the first quarter, thereby creating positive working capital for a large portion of the year. The next category is variable payments. This rent is paid by tenants as a percentage of farm gross proceeds. In variable payments we have exposure to both upside and downside of farm performance, but the downside is often protected or mitigated because cost overruns are borne by the tenants.

Tenants generally make variable payments after harvest in Q4 and Q1. We have one large variable rent contract that accounts for approximately $6.5 million. That contract is very well covered by farm revenue, at least 1.7 times coverage for the last four years, including 2020, which is impacted by COVID 19. We consider this large contract to be relatively low risk. I will come back to this $6.5 million in a minute.

Direct operation is the next category. It is higher risk than variable payments because we don't have a tenant bearing the cost, the risk of cost overruns, but the upside is also higher as we are not sharing farm revenue with a tenant. We present direct operations in this table in gross profit to make it more comparable to the first two categories. For direct operations gross profit we add crop sales and crop insurance and subtract cost of goods sold. Because we are looking at direct operations at on a gross profit basis when we total the values described in this table, the result is total revenues less cost of goods sold.

The last category is other items, which includes revenue associated with auction, brokerage and other activities. When we consider the total amount of revenue less cost of goods sold, we want to point out that the lower risk parts of the business, the fixed payment, and that one large $6.5 million contract represent approximately 85% to 95% of total for years 2020 and 2021. Again, approximately 85% to 95% of years 2020 and 2021 are comprised of fixed payment and one large low risk variable rent contract.

2021 was a little bit lower than 2020 on that percentage basis, as we had greater variable payments and other items. The charts below the table show the values of these different categories for 2021 and 2020. You can see the fixed payments, variable payments, direct to operations gross profit and other items. Again, the total on the right hand column is revenue less cost to get sold. 2021 was $50.2 million compared to $47.3 million for 2020.

On the next page, Page 15, we telescoped down into the fixed payments and variable payments, creating a variance bridge from 2020 to 2021. For fixed payment details, we separated out the performance of the same row crop farms from other items such as acquisitions, dispositions, permanent crops and farms that were non-comparable between the periods, same row crop farms or row crop farms in the portfolio before January 1, 2020. We do same row crop farms as the best way to remove the noise from the various activities that are grouped into the other category here.

As you can see performances up $200,000 from 2020 to 2021, it should be noted that many of the 2020 renewals that impacted this comparison between years were negotiated during the height of the COVID-19 pandemic and before the cover of the farm economy. Fixed payment associated with acquisitions, dispositions and other items was down $2.7 million. Invariable payment details, we again created a bridge from 2020 to 2021, tree nuts improved by $2.4 million, citrus improved by $900,000, grains declined by $100,000 and all other crops, which include corn, soybeans, wheat were up $600,000.

On the next page, Page 16, we provide an outlook for 2022. The table starts with the same categories described on Page 14, fixed payments, variable payments, direct operations gross profit, and others. We note that fixed payments from same row crop farms will -- excuse me, will increase by about $1 million driven by rent increases that we talked about on this call and prior earnings calls. Fee citrus farms converted from third party contract to direct operations in the second half of 2021. Thus for, those citrus farms 2022 has a shift toward direct operations and away from fixed payments and variable payments.

Other includes auction and brokerage business from our colleagues at Murray Wise Associates and acquisition completed in Q4 2021. The expense categories are based on assumptions included at the bottom of the page. This result in AFFO in the $9.1 million to $11.7 million range compared to $0.4 million in 2021. AFFO per share would be in the range of $0.19 to $0.25 compared to $0.01 for 2021.

We are assuming that the litigation concludes in 2022 with litigation spend in the range of $2.4 million to $3 million AFFO adjusted for the midpoint of that litigation spend would be in the range of $11.8 million to a $14.4 million compared to $8.6 million in 2021. AFFO per share adjusted for litigation would be in the $0.25 to $0.31 range compared to $0.24 for 2021. We will update this analysis through the year as necessary and communicate the results to you. This wraps up my comments for morning.

I will turn the call back to Paul for concluding remarks.

Paul Pittman

Thank you, James. Just before we go to Q&A, I wanted to amplify a couple of things that James said, and I didn't do this in my earlier comments because it's easier for everyone on the phone to grasp the importance of this after James had spoken. So, we went back to publishing a supplemental and putting out guidance as we have turned the corner and gone back to a growth strategy. We think this will help investors substantially in understanding the Company and understanding the outlook.

When you go look at the full year of 2022 outlook, on the revenue side, I want to amplify where the risks lie. So, analysts and others understand them. As James explained, our fixed payments is a relatively low risk line item on our revenues and about $6.5 million of the variable payments are quite secure because there is so much coverage, as it relates to that rental payment. So, around a 85% of our revenue is relatively low volatility. We still have collection risks and things like any landlord would have, but we should be relatively close on that 85% of our revenue.

The risk to the revenue projection really comes in our crop share, variable rent sections, that's mostly West Coast specialty crops and then it also shows up in our direct operations, which is mostly West Coast citrus. The issues there that make it difficult to predict are, I jokingly say it, but it's true. These crops are grown outdoors. We are at risk to the weather on those variable rents, and on those direct operations.

We will continue to update the market as we go through the year, on how performance of those various farms is going. But again, I want to emphasize that's around 15% of our revenue stream, where there is going to be some level of volatility. As you look at the various crops, citrus is probably 25% of the total risk and variable exposure and the citrus harvest as those of you who understand California citrus may know that harvest is starting right now. It's actually started right around the turn of the year, continues into the early summer for the main part of it.

And so, we will be able in the earnings call that occurs at the end of the first quarter to give some level of update on the volume of citrus and weather has treated us well on those crops. The second element of course of the volatility comes from price, and we will have to wait until later in the summer to see what the pricing is on those on the citrus.

Tree nuts tend to be harvested more late summer. They are in early fall harvest period. So, we'll have to wait till later in the year to see the outcome there. So I think we are in a very good position going forward for the year. But I just wanted to amplify and give a couple cautionary notes on how to think about the risks embedded in the 2022 outlook.

Operator, with that, we're going to open it for questions.

Question-And-Answer Session

Operator

[Operator Instructions] The first question is from the line of Rob Stevenson with Janney. You may proceed.

Rob Stevenson

Paul, is there a lawsuit against Sabrepoint now over, their lawyers put out a release that the suit was dismissed. What's the status from your end there?

Paul Pittman

Now, that lawsuit is not over. What they put out was it was the, it was quote-unquote dismissed at the lowest level of State Court in Texas on a jurisdictional related ruling. We of course are appealing that ruling, where you never can tell, it's a surprise to us that at the lower level judge dismissed it at all, because it did after Quentin Matthews statement last summer, which basically admitted that the article was largely, if not entirely false and that he had been paid to write it by Sabrepoint to believe that that dismissal will stand. You would have to believe that the judicial system of America is endorsing stock manipulation and stock fraud. But it's a court system we'll have to see what happens. But we are certainly appealing it and continuing to pursue them.

Rob Stevenson

Okay. And then along those lines, is there any, you know, road points along the way here for the lawsuit against the Company? Is there anything coming up that we need to be aware of? And is that still sort of a first half thing? Or is that going to be throughout the year, you guys think at this point?

Paul Pittman

Yes, so as James indicated what we have projected is that the lawsuits both of them will be concluded sometime in the second or third quarter of this year, probably late second or early third, if I wanted to narrow the range a little bit. The basic status of the two -- there's all these derivative cases that I won't talk about, but of the two main cases, the status is in the class action against the Company.

We are at the summary judgment step, which means for the non-lawyers on the phone that we have asked the judge to rule that there is no claim as a matter of law against the Company. Those claims relate to, today only relate to the quote-unquote loan program. And there's the discovery process made it clear that there's essentially no evidence to suggest that we intended to defraud the market that we made loans to related parties that the auditors didn't fully endorse and understand what we were doing.

There's just no evidence. And we're hopeful that it will be dismissed on the basis of summary judgment. But again, as I said, a moment ago, you can't guarantee that, but we certainly are hopeful. So that's what we're just waiting on for the wheels to turn and it'll probably take several months to get to the final conclusion of that. Assuming we win summary judgment, that would end that case, unless of course the other side appealed.

But we hopefully would think they wouldn't. We continue frankly in the face of a, of an ongoing Department of Justice investigation now into what happened to us and other companies by the shortened distort crowd, including, Quentin Matthews, is clearly been brought up in that situation. And the fact that there that Quentin Matthews has admitted the falsity of that argument.

We frankly have begged the class action lawyers and plaintiffs on the other side to drop their case against us, but it's not about law. It's about greed. So, there we go. On the case against Saberpoint, we're appealing the dismissal. We will intend to continue to pursue their bad actions against the Company for financial recovery, because we absolutely believe we're right.

And as I said, there's an ongoing DOJ investigation into those matters now. So it's finally not just us. Who recognize that paying an all to write an article that you on a company you've already shorted particularly when you know that article is false, when you write it, shouldn't be legal. So that's the status of two cases.

Rob Stevenson

And then, James, I missed it when you said how much for the 4.1 to 4.7 legal in account guidance is the ongoing litigation?

James Gilligan

Yes. Down at the bottom of that page, we give a little range, its $2.4 million to $3 million is what we've got projected in there.

Rob Stevenson

And then, Luc or Paul, what was the cap rate yield on the stuff that you bought and in the fourth quarter? And how much of that pricing changing throughout the year on relative to what it would've been at the beginning of 2020, or even back in 2020?

Paul Pittman

So, cap rates -- as land values.

Rob Stevenson

Especially equity comes down a bit, how are you guys thinking about that from a balance sheet and a financing standpoint relative to the acquisitions? And where those are being priced in the market?

Luca Fabbri

You, I mean, we are obviously very hopeful on growing the Company during the 2022 year. Certainly, we will look at all sorts of kind of off balance sheet, joint venture, other ways to raise private capital to deploy and be paid for the management of that capital. And of course, the payments for that management flow back to our common shareholders in the former revenue. So, we will certainly try to do that.

In terms of the inside the existing asset base of Farmland Partners today, we will certainly continue to do transactions, but we are highly sensitive to not just creating scale, but creating value. We believe today our stock is trading somewhat below net asset value. We're sensitive to that. We will from time to time raise capital for projects we're particularly excited about in terms of their long term return and financial rewards, but we're pretty cautious about scale for scale sake.

We really want value to drive us. And so we're probably more focus on off balance sheet basis until we see some substantial stock price recovery, but hopefully we're in a position during the year that we're comfortable continuing to grow the Company in sort of all of its facets both managing others capital as well as growing inside the asset base inside the public company.

Rob Stevenson

And then Paul one last one for me, you talked a bit about citrus and knowing about weather et cetera. How much of your citrus crops have been hit by greening? And what's the outlook there given the difficulty in managing that these days?

Paul Pittman

We luckily have a citrus portfolio that is almost entirely in California. We have one very small citrus farm in Florida, and it is affected, negatively affected as is everybody's farms, citrus farms in Florida by greening. In particular, even that farm, which is called Grassy Island, if you want to look in the data about our farms and you can see it on the website, that contains a particular Israeli variety called ori and the oris are, I don't want to say immune to, but somewhat more resistant to greening than other varieties that have been traditionally grown.

So, it's not a great situation on the Florida asset but it's, okay. In California, California as a state, the Department of Agriculture in the State of California is very strong and very proactive. And they to-date have largely kept citrus greening out of the state. The vector there is a small insect basically, neck sized insect, that moves the disease around and literally in Southern California, if that disease is identified in your backyard of citrus tree, the tree is destroyed, the tree is taken away, and probably burnt or something else in a way that eradicates the disease.

And they are very, very aggressive about keeping it out of the commercial citrus. Those of you who drive back and forth between Reno and the San Francisco Bay area, for example, you stop at that Ag inspection station, and that's really to make sure you're not bringing in citrus from Florida, that in particular into California, where it can get into the commercial production. That effort to keep it out is never perfect, but it's incredibly well done, all things considered. So, you just haven't seen greening in our crops, because they are growing in California yet. And we certainly hope you won't. So, far we're not very affected at all.

Operator

The next question is from the line of Dave Rodgers with Baird. You may proceed.

Dave Rodgers

Yes. Good morning out there. And Paul thanks to you and the team for an excellent improvement in disclosures this quarter. I wanted to follow up on the acquisitions pipeline. You talked about competition in the corn-belt and kind of where prices were. But can you talk about the overall pipeline of acquisitions you are tracking today and whether that competition follows you around the country outside of the corn-belt?

Paul Pittman

Yes. So, I mean, we have a very, very strong pipeline today. Like I said, we are sensitive to not just growing for growth sake. But, I mean, we have several hundred million of transactions that we are tracking. The Murray Wise acquisition has even broadened our neck of capturing transaction opportunities. As I've said on these phone calls in the past, the primary source of our transactions today is our tenants. The tenants are in the local markets. They like us. They know we have capital. They bring us really good ideas and we frankly diligence them and sometimes we buy and sometimes we don't.

So, we have a very real robust pipeline as far as the competition goes. We are unique among institutional investors in the space with just a couple of exceptions. In that, we will buy much smaller farms, particularly in the core of the Midwest, the Southeast and the Delta than other institutional managers, we believe that that's the right way to do it. And the reason we believe that so strongly is that we want to own many, many properties of different sizes.

So if we ever needed to liquidate properties, it's not just liquidating to other big institutional holders, billion dollar plus private or public vehicles, because if the market goes south and gets sour, it's likely to be bad for all of those institutional managers at the same time. So we really try to avoid doing what I call elephant hunting. We own some huge assets, but we also own a great deal of assets that would still be able to be purchased by successful family farmers and individual investors who want to put money into farmland.

So, we don't see much other institutional investment for that 500 or 1000 acre farm which we're happy to buy if it's a good farm with good tenant base. We do see competition from farmers on those assets. And so we've usually -- if a farmer really wants it, they beat us at the auction every time as it frankly should be. And so, but we're able to just broaden the universe of farms we'll consider in terms of other institutions, we are more focused on the core of the Midwest than virtually any other institutional manager.

Partly is, my personal history and the private company I had before we went public, but a year like this shows that long term total return including appreciation is stronger in the Midwest than frankly any other region in the country. And that means you have to be willing to take a somewhat lower cap rate, but the tenant base, the total yield, the total productivity is so strong there that long term total return is very, very strong there.

Most of our institutional competitors don't participate nearly as aggressively in the Midwest as we do. The competition we face in the Midwest is actually from the kind of smartest private family offices the really high real, ultra, ultra high net worth folks have historically bought those farms because of the security, the long term ease of management and the long term total return, they compete in that market.

And then historically, the longest term manager, institutional manager in farmland is the Mormon Church, as I've said, and they are always strong in the Midwest as well. So, we feel good about our pipeline and hopefully we'll have plenty of capital available to pursue that.

Dave Rodgers

Maybe one follow-up question for you or for James, Paul. On the '22 lead role, I think you said it was kind of comparable to what you saw in '21. Maybe you can dive a little bit deeper on that. And then, and then as a follow to that, maybe for James, when we look at the fixed 2020 number growing on a same store basis, obviously fairly anemic, and you explained why in your comment. What does that look like on a like for like basis into ’22, adjusting for farms that'll be put into the direct operation. I guess what I'm asking for is what does the true comp for same store revenue look like for 2022? Thank you.

Paul Pittman

Yes. So let me just start with that then James, I'm going it turn it over to you, if you want to try to do a little math to help Dave while I'm talking. So, first, James alluded to this in his prepared comments, but I want to reinforce it since you asked the question. We have historically presented this same store sales number, looking at kind of everything we owned for two full-years was the simple rule of what was in the same store sales bucket. It dawned on us.

And so, I regret that it took seven years, I'll blame that on myself, but what was happening is we were -- what investors really want to know is what's happening in the fixed rents where we drive those rents up or down based on negotiations with our tenants? And what our same store sales number was reporting was largely weather. We were getting swamped that same store sales numbers getting swamped by what was going on the West Coast specialty crops, because they're big dollar amounts if you have a good crop versus a bad crop.

So what we're trying to do here is to say, let's focus on reporting to the market what's going on with fixed rent, which is largely a crop measure or it's a fixed cash rent. And is it going up when we renegotiate or down on a year-over-year basis. And remember, this is all GAAP. So on a cash basis, our rents are almost always going up because we have cost to living adjustments in those rents, but the way GAAP reports, of course, through straight lining you lose that effect.

But the 2020 -- and I reemphasize what James said, in '21, we did not get the benefit of renegotiating leases higher because the lease renegotiation cycle is largely the late summer. And so in the late summer of 2020 hard to believe, but that was, I mean, it seems like a long time ago, but that was the sort of depth of the COVID crisis and the farm economy hadn't really started to recover. So, we have -- we can in that negotiation and therefore eked out not particularly good rent increases in the summer of 2020.

In the summer of 2021, as we disclosed, pushed approximately 10.5% increases on those rents and that will flow into the 2022 revenue cycle. And then as I said, we'll do it again in 2022, which will up the revenue cycle for 2023. James, you want to go a little deeper if you can on the rest of today's question.

James Gilligan

Yes, sure. We anticipate that the same row crop fixed payments, right? That kind of metric that the Paul is describing qualitatively will be up $1 million in 2022. And the 2022 increases that will take place in the sort of late summer fall timeframe will really impact just the following year 2023.

Paul Pittman

And as I said, Dave, I would expect that we're at or above that number for the 2023 year as we based on the increases we hope to get in 2022.

Operator

Thank you. The next question is from the line of Buck Horne of Raymond James. You may proceed.

Buck Horne

Just wanted to clarify a couple things in the guidance, if I could. Within the revenue guide for 2022, is there any new net M&A activity on the acquisition or disposition side that's embedded in the guidance for this year?

Paul Pittman

No, we did not and James feel free to add on to this, but we did not project capital raises -- equity capital raises, debt issuances, acquisitions or dispositions. We will update as we do those things through the year. What we wanted to do here was to present frankly a baseline and then move from there as events, idiosyncratic events like those things occurred during the year. James, anything you want to add to that answer?

James Gilligan

Nope. Nope. Well covered.

Buck Horne

Got it. Got it. That's helpful. Thanks. I appreciate that. And then also just going back to the guidance, maybe help me understand kind of the variance that's happening from year to year and the general administrative of just the D&A number from what it was last year to the projection this year? I know there are moving parts and if there is different line item currently.

Paul Pittman

Yes. I'll hit the big points. So first, settle litigation aside, on the cost structure side in our guidance, litigation is the risky line. Rest of this is reasonably predictable and easier to understand. Turning to general and administrative specifically, the increase year-over-year from '21 to '22 is driven by really kind of three relatively significant impacts. The first is we have added some level of senior staff in the Company, as we went back to a growth-oriented company.

James joined us. LUCA became President, so one additional high quality, but not inexpensive staff member. We have also added some other people in the Public Relations area, so on and so forth. So, we've added some staff in the core business of FPI. We're still small. We were 14 employees and now we are 15 or 16, but it's a for the asset base we have, it's efficiently managed, but we added some staff.

Number two, the Murray Wise acquisition did add and that's of course we are close through our P&L now. We believe that will be an overall profit contributor to the Company and a growing profit contributor. But just the base farm management and real estate brokerage business, they have added some staff and added obviously costs, but we'll also add revenue in excess of those costs.

And then the third thing is as we've made some, some increases in the size of our Board, under various ESG initiatives as well as the rounding out the talent level of the Board. And that always incrementally adds a little bit of additional costs, but those are the big movers in the G&A line.

Operator

Thank you. The next question is from the line of Craig Kucera of B. Riley Securities. You may proceed.

Craig Kucera

Yes. Good morning guys. I also wanted to circle back to the guidance specifically as it relates to the other income/revenue line item. Is that just revenue coming off of your expectations from Murray Wise or are you expecting to roll out a little bit more on the loan program in 2022?

Paul Pittman

James, I'm going to flip that question over to you because I don't honestly know the specific answer. Give as much color as you're comfortable with.

James Gilligan

Yes, sure. It's mostly from the auction brokerage activities. So, it's really kind of Murray Wise activities, and throughout the year, there's from time to time, little bit of miscellaneous revenue that that would show up in that line too, but we don't have anything projected in that regard.

Craig Kucera

Got it. And I think the rest of mine are answered. Thank you.

Paul Pittman

Great. Thank you, Greg.

Operator

Thank you. The next question is from the line of Ryan Watson with Medium Investment Advisors. You may proceed.

Ryan Watson

Hey, Paul, I think you've actually covered everything, but let me ask you one question. You mentioned that the DOJ, has the DOJ notified FPI, if it's investigating Sabrepoint?

Paul Pittman

No, we haven't been notified nor would we expect to be specifically notified. We largely know the same things you're all seeing in the newspapers. We didn't sort of publicize this on our website or anything, but there was a -- several weeks ago, there was a relatively long Bloomberg article, a few weeks after that there was a Wall Street Journal article on it. And then in the last few days there's been a significant Reuters' article that talks about potential Rico charges.

You have to go back and read those articles, if you want to look for them to see who's named where, but what happened to us is always is discussed in most of those articles and we know what happened to us and others is part of that at least related to that investigation as you would expect, the DOJ is appropriately quiet about these things. As they're going through their process, from our perspective, it's been a long, long time, but we're certainly happy and optimistic.

There's not a lot more that can be said when you beyond what Quentin Matthew already admitted, but it sure would be nice to see sort of the final step in the justice process occur against the people who did this. It destroyed an immense amount of value for shareholders in our company, and we're -- we still believe and continue to stand up for what we think is right here even at a certain cost. But sure be nice to see the DOJ follow it all the way through.

Ryan Watson

Sure. And let me ask one follow up. On the previous freeze, I read that 15 to 20% of Florida citrus production's going to be cut this year. I know the weather usually doesn't go that far south. Do you have any indication that the current freeze that’s sweeping the U.S. right now is going to impact any of your California farms? And that's all for me.

Paul Pittman

It's very interesting you asked that. The answer is we don't know. We don't think so. We actually prepping for this call, talked about it briefly yesterday. There's for those of you on the call, who haven't tracked it, there's Denver, for example where some of the team is today. It's very, very cold in Denver. The West Coast and the Intermountain region is experiencing quite a bit, quite a bit of a cold snap. We think we'll be okay.

The predictions are relatively short lived for low temperatures and the, you know, it's probably not at a place where most citrus farms including ours. We have the ability to there's these like big fans basically that move the air around and stop that cold air from settling in and having a deep freeze right on your property. They're called wind machines. So, we think that citrus is fine.

On the almond side, almonds are right at the point of bloom. The spring in the Central Valley of California is already sort of here. It's a little bit of a cold snap and a little worrisome there. But again, we think we get through that without a significant problem. And again, if you see a significant reduction in volume available, there's usually a price response that frankly is bigger than the reduction in volume.

So, it's not as a revenue matter unless you are completely wiped out, necessarily a bad thing on the revenue side. But obviously, we hope that that essentially it's nothing comes of it, but with something we are tracking. And if you want to call me up and ask my opinion in a week, we'll be able to tell you the answer.

Ryan Watson

We'll do. Appreciate the color. Like I said, I was a little bit shocked at the previous freeze went that far south in Florida. Thanks Paul.

Paul Pittman

And Florida, as I said in my comments, we're essentially not exposed in any significant financial way, the Florida citrus, but California is a different question.

Operator

Thank you. There are no additional questions at this time. I will now pass back to management team for any further remarks.

Paul Pittman

Thank you, ma'am. Thank you all on the call for listening to all of us on the management team, I want to congratulate James Gilligan, our CFO in particular from the high quality supplemental that we've put out, a lot of work for him and his team. Hopefully, it'll help transparency and communication with those on the street.

So with that, we'll conclude the call and look forward to talking to you folks again in the next quarter.

Operator

That concludes today's conference call. Thank you and have a great day.