September 3, 2019

By Lynda Kiernan

Gladstone Land has announced two California farmland deals in quick succession, the first, the acquisition of a large coastal farm on the Oxnard Plain of California for an undisclosed amount,  and the second, the accession of a 366-acre vineyard in Napa for $32 million.

“…we continue to add to the strength and diversity of our farmland holdings in the U.S. Since June 30, 2019, the company has acquired over $153 million of new farms,” said David Gladstone,  president and CEO, Gladstone Land. “This is a substantial increase since we last reported, and we now own about 82,000 acres across ten states. These recent acquisitions should add nicely to the revenue and earnings for the remainder of 2019.”

Oxnard

The coastal farm, which is located in one of the top growing regions of one of the top agricultural states in the U.S., includes 413 gross acres of farmland, and has been operated by the same family for multiple generations.

Gladstone has been in talks with the seller for years, and acknowledges how fortunate the company is to have been able to come to an agreement that is a win for all parties.

“Opportunities to acquire large coastal California farmland do not come along very often, and we feel very fortunate to have been able to complete this transaction,” said Bill Reiman, managing director of Gladstone Land.  “We had been in discussions with the seller of this property for several years, and only recently were we able to come to terms on an agreement that fulfills all parties’ goals. This property is in a prime location, and we look forward to being stewards of this large farm for many years.”

Upon closing of the deal, Gladstone entered into lease agreements with two different, unrelated tenants to operate the property. Moving forward, the seller will lease back the majority of the farm to continue their sod business, while the remainder will be leased to a local berry grower for the production of a variety of berry crops.

“We have several excellent tenants who are long-time farming families in this growing area,” said Gladstone. “The Company continues to build a diverse portfolio of farmland focused on healthy foods, such as fresh produce and nuts. Acquisitions like this demonstrate our business strategy of buying high-quality farms that provide steady rental income that is used to pay dividends to stockholders.”

Napa

The second deal, which brings Gladstone into a new region, was for a 366-acre vineyard in Napa. By gaining a foothold in the leading premium wine grape growing region in the U.S., Gladstone sees the deal as securing the company a presence in the California wine industry.

As is standard, Gladstone entered into a 10-year, triple-net lease agreement with the seller, adding another strong long-term tenant to its base.

“It’s rare that opportunities for a beautiful vineyard like this one come along on attractive terms, but our team did a great job of finding this one and negotiating its purchase,” said Gladstone.  “We now have an excellent vineyard with an outstanding tenant in Napa Valley, California.”

“Entering Napa Valley also adds a new growing region to our list of farm-growing areas, further diversifying our farmland holdings.  Diversification is a key element in our desire to reduce risk and build a farmland REIT that can pay steady dividends to stockholders.”

Gladstone has had a very productive summer, closing six farmland acquisitions since the beginning of June, including three in less than a month’s time.  In mid-August, the company announced another acquisition in California, whereby it acquired nearly 1,000 gross acres of farmland in Coalinga, California, for $33 million. 

The parcel, which consists of a 911-acre orchard planted in mature pistachio trees, is the first (and smaller) part of a two-part deal, with the second part set to close in the fourth quarter of this year.

This deal is also a continuation for Gladstone in the building out of its pistachio holdings. The company made its first pistachio acquisition in 2016, when it acquired a 453-acre property in Fresno, California, planted in trees ranging from five to 19 years of age, for $15.5 million. 

The following year, Gladstone acquired four contiguous farms, again in Fresno, for $13.6 million. Of the total 847 acres planted between 2002 and 2009, 327 were planted in pistachio trees, while another 318 were planted in almonds. 

Then, in November of last year, the company closed another significant deal, with the acquisition of a 951-acre farm in Madera County, California, that included 715 acres of mature fig orchards, and 224 acres of mature pistachio orchards for $23 million. 

One month earlier, in July, the company announced it had added to its Florida holdings with the acquisition of 3,586 acres of farmland and facilities in South Florida for a total consideration of approximately $58 million. 

Historically, the property had been used to grow vegetables and as a citrus farm, however, is currently being used for diversified agriculture and primarily for water retention. As is standard, Gladstone entered into an eight-year, triple-net lease with Caulkins Citrus Company Ltd. to manage the farm, which eventually has the potential to be converted into organic production.

Together with Gladstone’s other recent acquisitions, the two latest acquisitions bring Gladstone’s overall farmland portfolio to 95 farms totaling 82,000 acres across 10 U.S. states, carrying a value of $821 million.

Most farms are located in regions suitable for the production of fresh produce and annual row crops such as berries, however, the company also has extensive and growing holdings in permanent crops, including almonds, apples, figs, olives, pistachios, blueberries, and vineyards.

– Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.