February 2, 2023

By Lynda Kiernan-Stone, Global AgInvesting Media

PGIM Agricultural Investments (PAI) has acquired 3,537 acres of lemon orchards in Tulare County, California, from Limoneira, a diversified citrus growing, packing, and marketing company with related agribusiness and real estate development operations, for $100 million. 

The properties consist of a total 2,700 planted acres, another 231 acres of plantable ground, and 606 acres of open space. 

Under the terms of the deal, Limoneira and PAI entered into a Farm Management Agreement outlining that Limoneira will provide farming services connected to the property for an initial term of one year. 

Additionally, the two parties entered into a Grower Packing & Marketing Agreement through which Limoneira will provide packing, marketing, and selling services for the lemons harvested on the property for a minimum term of five years. 

Headquartered in Santa Paula, California, Limoneira has been in existence for 130 years, and has grown into one of the world’s leading international, integrated agribusinesses. Today, the company is a leading producer of lemons, avocados, oranges, specialty citrus, and other crops on 11,900 acres, and holds real estate properties and water rights in California, Arizona, Chile, and Argentina. 

In FY 2022, the company posted record revenue of $184.6 million, representing an 11 percent jump due to record-high sales of avocados and oranges.

This sale of its Northern properties aligns with its Strategic Plan as established by its Board of Directors at the start of 2022.

From that point, over the next 12 to 18 months, the company set goals to realize, including:

~ Transition One World of Citrus™ to an “asset light” model
~ Streamline operations and sell non-strategic assets
~ Improve consistency of earnings
~ Increase EBITDA and Dividend Per Share
~ Reduce debt and right-size the balance sheet
~ Improve Return on Invested Capital (ROIC)

“Over the next 12 to 18 months we expect to achieve the goals set out in our Strategic Plan, to include streamlining operations, improving consistency of earnings, and increasing EBITDA and dividends per share,” said Harold Edwards, president and CEO, Limoneira.

The company stated that this sale will accelerate its strategic plan for asset monetization, with $130 million of the $150 million identified assets sold in the past three months. 

“During the past three months, we have sold approximately $130 million of the $150 million of non-strategic assets identified for sale and are exceeding our internal timeline and valuation projections,” said Edwards. 

“Moving forward, we will continue to advance our asset-light model as we focus on the best use of our valuable portfolio of agricultural lands, real estate properties and water rights, along with utilizing our expertise in packing, marketing and distributing to increase our grower partners.”

Limoneira stated that the $99 million in cash proceeds gained through the deal will strengthen its balance sheet and enable the company to pursue a range of opportunities to maximize shareholder value. 

Edwards noted,  “We expect the $100 million Northern Properties transaction will be accretive to EBITDA and earnings on a pro forma basis. In addition, it is a great example of the planned expansion of our asset-light supply chain as we pivot towards being a service provider as a farm manager and packer, marketer and seller of the lemons harvested from these properties.” 

He continued, “The proceeds from the sale will significantly reduce our overall debt and allow us greater flexibility to consider a broad range of strategic opportunities and then selectively pursue those that will maximize value for our stockholders.”

~ Lynda Kiernan-Stone is editor in chief with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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