October 11, 2024

By Gerelyn Terzo, Global AgInvesting Media

Farmland Partners Inc. (FPI), a Denver, Colorado-based real estate investor, is offloading nearly $300 million in farmland assets to Farmland Reserve, an investment auxiliary of The Church of Jesus Christ of Latter-Day Saints (LDS). The massive portfolio of assets comprises nearly four-dozen farms across 41,554 acres of farmland in Sunbelt states including Arkansas, Florida, Louisiana, Mississippi, Nebraska, Oklahoma and the Carolinas, most of which comprises row crops such as corn, soybeans, wheat, cotton, rice and peanuts. Farmland Reserve CEO Doug Rose said the company will secure long-term leases with local growers.

Rose explained, “Farmland Reserve, as an integrated investment auxiliary of The Church of Jesus Christ of Latter-day Saints, invests in agriculture as a safe, prudent way to preserve and grow the Church’s financial reserves…The returns earned by Farmland Reserve are available exclusively to support the mission of the Church and it’s religious, humanitarian, educational and charitable good works.”

Farmland Partners Executive Director Paul Pittman told GAI News, “We believe Farmland Reserve is a great long-term steward of farmland, and we believe that they work well with farmers. We are pleased to sell to them and to transfer tenant relationships to them.” He further shared that FPI held the farms within this portfolio anywhere from approximately two to 10 years, depending on farm. The firm built up the portfolio through multiple transactions over the years. Since FPI went public in 2014, it has purchased over 300 farms.

The all-cash deal, which emerged as a result of a private negotiation with Farmland Reserve, is expected to close on Oct. 16. FPI, a publicly traded entity, expects to generate a profit of $50 million, or 21 percent above the aggregate net book value of the farmland. FPI intends to direct the proceeds toward slashing debt, repurchasing equity shares and buying more land.

Boasting a farmland portfolio worth a reported $2 billion, the LDS investment arm is an agricultural juggernaut, owning over 1 million of acres of farmland including hundreds of thousands of acres in Nebraska. Additionally, Farmland Reserve has risen as one of Florida’s most influential private landowners, boasting a portfolio of over $880 million, reports indicate.

As of Q1 2024, FPI revealed it had six remaining disposition transactions it could complete in 2024, one of which is represented by the latest deal, Pittman confirmed. Executives said on the Q2 earnings call that if they had a better cost of capital, they would be buying farmland, not selling it, describing land values in row-crop regions as having reached a “plateau period.” Between 2022 and 2023, U.S. cropland rental rates inched higher by 1.3 percent to $155, on average, as pastureland rental rates grew by 3.7 percent in the period to $15 per acre, per USDA data.

Chart by USDA

In response to the sale, FPI President and CEO Luca Fabbri stated, “Farmland is a ‘total return’ investment, with asset appreciation typically accounting for a majority of the overall return on invested capital…We are pleased to transition our long-standing tenant relationships to a high-quality institutional investor that values relationships as we do. Farmland Reserve is highly respected in the farmland community as a best-in-class owner that manages farms expertly and deals honestly and ethically with its farmer tenants. We strongly believe that our farmer tenants will have an excellent partner moving forward.”

Farmland Reserve CEO Doug Rose said, “We are grateful for the opportunity to work with Farmland Partners to acquire this unique portfolio of high-quality farmland. We’re also gratified they saw us as the right buyer for these properties and the farmer tenant relationships that come with them. As an investor with a long-term vision, we look forward to leasing these productive farms to local farmers for many years to come.”

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