December 16, 2020

By Lynda Kiernan, Global AgInvesting Media

Through one of its wholly-owned subsidiaries, real estate investment trust (REIT) Gladstone Land has expanded its secured note purchase facility with Federal Agricultural Mortgage Corporation (Farmer Mac) by $100 million. 

Under the terms of the agreement the secured note was extended from $125 million to $225 million, and the date up to which Gladstone can issue new bonds has been extended to May 31, 2023.

These such bonds are secured by mortgage loans on the agricultural assets owned by Gladstone and have an effective loan-to-value ratio of up to 60 percent of the mortgaged real estate.

“Farmer Mac has been a supportive lender of ours for many years, and we are pleased to expand on our existing facility with them,” said David Gladstone, president and CEO, Gladstone Land. “We believe this upsized facility will play an important role in our continued growth.”

And growing it always is. Two days later Gladstone announced the acquisition of a 368 acre farm in Ventura County, California, for approximately $20.8 million. 

Once the deal closed, Gladstone entered into a lease agreement with a prominent farming operation growing a range of fresh vegetables for the management of the farm.

“We are excited to announce the addition of another quality farm in Ventura County,” said Bill Reiman, executive vice president, West Coast Operations, Gladstone Land. “This acquisition is a fine example of our ability to continue adding valuable fresh produce farmland to our portfolio. We are gaining a prominent new tenant who has been in the fresh vegetable business for generations, and we look forward to further expanding our business with them in the future.”

David Gladstone added, “This acquisition adds to our portfolio of farms growing fresh produce in the heart of the Oxnard Plain. We are also excited to form a relationship with a new tenant who has a long history of farming in Southern California.”

California Calling

This deal marks the fourth in the state of California for Gladstone over recent months.

In June the company added a new permanent crop to its portfolio along with 590 gross acres of farmland, of which 554 are planted in mature pecan trees,  in Kern County for approximately $14.2 million.

Pecan production is a savvy move. Last year, U.S. pecan growers experienced the “largest demand in the history of the pecan industry,” according to Matthew Bailey with the Pecan Report. 

And as the global pandemic causes havoc among much of the ag and food supply chains, the April 2020 Pecan Position Report found that the effects on pecan growers has been minimal.

“Both the global supply chain as well as the marketing strategies currently undertaken by the American growers have been able to continue the historic rise in demand for pecans,” noted Bailey, who went on to state that pecan supply chains have remained steady as demand continues to climb even beyond last year’s record. 

Further minimizing their exposure, according to the terms of this latest deal, Gladstone agreed to buy the land, but not the trees, gaining diversification of its California portfolio with marginal risk.

In early September Gladstone then shared that it had acquired 2,515 gross acres of farmland in Fresno County, California, for approximately $31.8 million.

Of the entire Fresno, California, parcel, 619 acres are planted in mature pistachio orchards, and another 1,896 acres are open farmland, of which 1,273 are certified organic.

This deal not only added high-value permanent crop acreage, but brought additional value – both through the value attached to organic farmland as a real asset, higher premiums for the organic crops harvested, and as a sizable regenerative carbon sink.

One month later, in early October, Gladstone Land announced that it had acquired 801 acres of farmland in Fresno County, California, of which 757 acres are planted in pistachio trees, for approximately $31.8 million. 

In connection with this latest pistachio deal, Gladstone has entered into a three-year, triple-net leaseback agreement with the seller.

This deal harkens back to August 2019 when the company acquired nearly 1,000 gross acres of farmland in Coalinga, California, for $33 million of which 911 acres were planted in mature pistachio trees. The second part of the deal was completed in November when Gladstone spent another $37 million to acquire 1,100 gross acres of farmland consisting of 1,040 acres of mature pistachio trees. In connection with both deals, RTS Agri Business and Canoas Creek Pistachios were contracted to run the operations.

With the addition of the vegetable acreage just acquired in Ventura Country, Gladstone Land’s portfolio now counts 131 farms totaling 95,000 acres across 13 U.S. states carrying a value exceeding $1 billion.

– Lynda Kiernan is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, and HighQuest Group’s Oilseed & Grain News. She is also a contributor to the GAI Gazette. She can be reached at lkiernan@globalaginvesting.com.