November 4, 2019

By Lynda Kiernan

Gladstone Land announced it has closed on the second phase of a two-part pistachio orchard acquisition in Coalinga, California, for $37 million.

This final part of the deal, which surpasses the first phase by $4 million, and brings the total combined deal value to $70 million, is for 1,100 gross acres of farmland, consisting of 1,040 planted acres of mature pistachio trees. Connected with the acquisition, Gladstone will enter into an eight-year, triple-net lease agreement with RTS Agri Business and Canoas Creek Pistachios.

The first phase was executed in mid-August of this year, when Gladstone acquired nearly 1,000 gross acres of farmland in Coalinga for $33 million. This first parcel consisted of a 911-acre orchard planted in mature pistachio trees, and as with the second phase, the same two lessees – RTS Agri Business and Canoas Creek Pistachios – were contracted to run the operation. 

Overall, this deal adds nearly 2,000 acres of pistachio orchards just reaching prime production to Gladstone’s farmland portfolio, and brings the value of Gladstone’s acquisitions for the year to more than $250 million.

“We have now acquired more than $250 million worth of farmland so far in 2019,” said David Gladstone, president and CEO, Gladstone Land. “This has been a record year for us so far, and it’s not over yet.”

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. 

The  addition of the orchard in Coalinga not only expands Gladstone’s permanent crop portfolio and its pistachio holdings, but brings with it infrastructure that will add value for shareholders, explained Bill Reiman, managing director at Gladstone Land, in August upon the closing of phase I of the deal, saying, “This is a large holding with its own solar facilities to help reduce energy costs,” he said, “…and the farm has added value due to the water infrastructure that allows the grower to deliver surface water to the orchard.”

Pistachios also represent an agricultural investment that seems to be bulletproof amid global tensions and trade wars. Knowing that China was one of the largest markets for U.S. pistachios, growers braced for a hit as the trade war showed no signs of easing. That hit, however, didn’t come. Instead, U.S. pistachio exports to China jumped by 7 percent to reach a record 108 million pounds over the 12 months to August 2018, according to the Administrative Committee for Pistachios, reported the Los Angeles Times. And over the following six months, exports jumped by another 10 percent. 

“Pistachio and almond prices have remained strong, and increased trade wars have had little impact on their overall demand,” said Reiman. “The addition of these crop types has increased the diversification within our farmland holdings and has provided a strong source of additional income to our already-existing portfolio of farmland primarily growing fresh fruits and vegetables.”

As Gladstone continues to make 2019 a year of note, this two-part deal brings the REIT’s farmland portfolio to 103 farms totaling 87,000 acres across 10 U.S. states, valued at approximately $873 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. And like in the Coalinga deal, Gladstone is also open to the acquisition of infrastructure related to agricultural production, or assets such as cooling, processing, or packaging facilities, and distribution centers.

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