July 29, 2024

By Gerelyn Terzo, Global AgInvesting Media

Farmland LP, a California-based investment firm dedicated to transforming conventional farmland into sustainable organic farms, has announced the acquisition of three properties in Northern California’s Sacramento Delta across 2,625 acres for a combined price tag of $35.6 million. The farms, all three of which are currently planted with almonds, were scooped up through the $250 million Vital Farmland III fund at auction amid the insolvency of private equity farming company Trinitas Farming. A perfect storm of the Trinitas bankruptcy, cyclically low almond prices and elevated interest rates paved the way for the attractive deal.

Farmland LP Founder and Managing Partner Craig Wichner stated, “We believe that now is an opportune time to acquire properties like this portfolio. This strategic acquisition underscores our ability to acquire opportunistically, capitalizing on market conditions to acquire high-quality assets at favorable prices.”

He also told GAI News, “Demand for organic, high quality food continues to grow, and our $250M Fund III enables us to buy more farmland and convert it to organic, building on the success of our previous two funds. Our value-add strategy benefits from current market conditions, providing investors with a resilient and high-value opportunity.”

The properties, which are strategically located near Farmland LP’s existing farm operations hub in Northern California’s San Joaquin Valley, boast coveted access to a valuable and reliable water supply through California’s oldest and most secure water rights. Wichner, in a recent webinar, discussed the complexity of the water topic, saying that one of the key trends resulting from climate change is more extreme water conditions, including surplus and scarcity such as flooding and droughts, lasting for longer periods.

Prior to the transaction, Fund III — Farmland’s largest to date — had zero almond exposure. According to auction results published by Acres, there was limited bidder price interest in the ranches previously owned by the Trinitas fund due to a challenging environment for almond tree crops in California’s Central Valley.

Almond orchards auctioned from this almond-only investment fund ranged between the fourth and ninth leaf, or somewhere in the range of four to nine years old. With full maturity at sixth leaf, this places the almond ranches at the more mature end of the age spectrum, likely accelerating Farmland’s cash flow generation as the crops reach full production. Farmland’s healthy balance sheet, including low debt coupled with a diversified farm portfolio across geographies and crop type, enhances the profitability proposition and stability of its fund. Meanwhile, in its latest forecast, the USDA predicts a 13 percent increase in California’s almond production to 2.8 billion meat pounds thanks to favorable weather conditions during bloom as almond prices show green shoots of rebounding from 2022 lows.

As part of its value-add strategy, Farmland plans to maintain almond production on two of the three properties while converting a portion of the third farm into organic vegetable rotation, aligning with its mission to transform conventional farmland into high-value, organic and sustainable agriculture.

With more than $300 million in AUM, Farmland LP grows several dozens of crops, focusing primarily on organic crops using regenerative farming techniques. After launching Fund III last year, Farmland plans to make future acquisitions in Oregon and Washington where the firm currently manages roughly 12,000 acres.

Farmland LP recently bolstered access to its Fund III through a partnership with AI Insights by iCapital to facilitate education and training on alternative investments and compliance to wealth advisors.

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