July 17, 2018

Real Estate Investment Trust (REIT) Gladstone Land is in the news again this week, announcing that it has agreed to acquire five farms in southern Florida totaling 5,630 acres for a total consideration of $37.4 million.

Upon completion of the deal, which will add significantly to the company’s high-value fruit and vegetable acreage in the state, Gladstone entered into a multi-year, triple net lease with a top agricultural operation.

“This acquisition adds another strong tenant and five additional top-tier farms growing healthy produce to our growing list of owned and leased farmland,” said David Gladstone, president and CEO of Gladstone Land.

“This region has very fertile ground and many strong farm operators who we can partner with to continue expanding our farmland holdings in the region,” said Bill Frisbie, managing director of Gladstone Land.  “Florida continues to experience strong population growth, which puts upward pressure on farmland values and rents as more acreage is taken out of production every year for development.”

Helping to make this deal possible, Gladstone announced on July 12 the successful sale of one of its Oregon-based farming assets for $20.5 million.

Although the company’s strategy is to hold portfolio assets for the long-term, the tenant currently managing the property made Gladstone an offer for the farm that drew the company’s attention.

“Our sale in Oregon was driven by a very compelling purchase offer from our current tenant,” said Frisbie.  “Our strategy is to buy and hold for the long term, but occasionally we receive an offer that warrants serious consideration.”

The offer of $20.5 million reflects a premium of 22 percent above the farm’s most recent valuation, and resulted in a 22 cent increase to Gladstone’s estimated net asset value per common share; a 20 percent internal rate of return on its initial equity investment; and a gain of $6.4 million on the sale.

“We were able to quickly reinvest the proceeds from the recent sale of an Oregon farm into these larger and higher-yielding farms,” said Gladstone, “…and by executing this acquisition in conjunction with our recent sale of an Oregon farm through a like-kind exchange, we have deferred recognition of the capital gain we achieved on the sale.”

The intention to continue pursuing acquisitions was hinted at by Gladstone who commented at the time, “We look forward to continuing to build on our existing tenant-farmer partnerships during 2018,” said Gladstone. “Our current acquisition backlog remains healthy, and we hope to be able to acquire several additional farms that grow a variety of crop types throughout the rest of the year.”

-Lynda Kiernan