July 18, 2017

Gladstone Land announced the acquisition of four contiguous farms located in Fresno, California, for approximately $13.6 million.

The four properties encompass a total 847 acres, of which 327 acres are planted in pistachio trees, and another 318 acres are planted in almond trees. All plantings were completed between 2002 and 2009.

Under the terms of the deal, upon closing, the two parties – Gladstone Land, and the seller, who is a leading grower, harvester, and processor of almonds and pistachios, will enter into a 10-year, triple net lease. The lease is structured to include one five-year extension option, a fixed cash rent component, and a revenue-sharing component based on harvest volumes on the properties.

“This acquisition is another fine example of the productive relationships we have developed with our tenants,” said Bill Reiman, Gladstone Land’s managing director for the Western United States. “The sale-leaseback transaction is a hallmark of our investment thesis, and we hope to continue providing this service to current and new tenants all over the Western United States.”

The Rolling Gladstone

This deal is the fourth announced transaction for Gladstone since the beginning of this year, bringing the firm’s farmland portfolio to 69 farms totaling 58,777 acres valued at $504 million, across eight U.S. states. Typically the company structures its farmland acquisitions to include lease-back agreements that enable experienced tenant farmers to produce both annual row crops and vegetables, as well as permanent crops such as blueberries, almonds, and pistachios.

In January, Gladstone announced that it had acquired 3,750 acres of organic farmland in southern Florida for a total consideration of $54 million. Under the terms of the deal, which significantly added to the company’s organic holdings, Gladstone agreed to a seven-year lease agreement with a leading regional vegetable grower and marketer that includes clauses for annual rent escalations and options for three, five-year extensions.

Then, after a period of relative quiet, the company announced at the beginning of June that it had acquired four farms in southwest Arizona totaling 3,253 gross acres with 3,032 irrigated, of which a portion is certified organic for a total consideration of $27.5 million.

Geographically, the expansion is a smart strategic addition to Gladstone’s portfolio. Southwestern Arizona is a key winter production region for fresh produce and one of the top production regions for early summer melons.

“This is our second large acquisition of 2017, and we are excited to enter into a new growing region,” said David Gladstone, president and CEO of Gladstone Land at the time. “This is another acquisition that continues to improve the overall diversification within our farmland portfolio, which provides additional security to our shareholders in the form of increased distributions.”

Then, within days, the company announced the acquisition of two contiguous organic farms totaling 310 acres in North Carolina for approximately $2.2 million, marking the company’s first acquisition in the Carolinas.

Gladstone’s activity this year points markedly toward its intention to expand into organic production and demonstrates the value it places on gaining exposure to the nut market as consumers increasingly skew their food choices toward healthier options.

“This acquisition allows us to continue to grow our portfolio of farmland focused on growing healthy products, such as fresh produce and nuts,” said Gladstone. “The lease on this property should allow us to generate strong returns, thereby helping us to achieve our goal of regularly increasing the distributions we pay to our shareholders. We have increased the distributions rate on our common stock in each of the past four quarters.”

-Lynda Kiernan

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