Gladstone Land Corporation is furthering its diversification into permanent crops, acquiring three farms totaling 850 acres of irrigated farmland in Kern County, California for $19 million.

 

The company plans to finance the new tenant-farmers development of the property, currently planted in wine grapes, to almond orchards at an expected total cost of $8 million.

 

"Today's announcement marks our most significant foray into permanent crops to date, specifically almonds," said Bill Reiman, Managing Director of the company's western division in a company release. "We expect the entire property will be planted with almonds soon…. This acquisition adds to our presence in southeastern Kern County, which, like most of our properties' regions, is an area of high-value agriculture. And we are partnering with one of the most successful almond growers in California."

 

Under the terms of the deal, Gladstone entered into a lease agreement with a leading almond, tomato and frozen vegetable player for a 15-year, triple-net lease that will provide a fixed return for the first four years, after which it will convert revenue-sharing rent structure including a rental floor. Depending upon yields and crop prices, annual rent for the property is projected to exceed 8% of the total invested. Gladstone funded the acquisition through a disbursement on the long-term note payable under its borrowing facility with Metropolitan Life Insurance Co.

 

Gladstone also announced its refinancing of its existing credit facility with its largest lender, Metropolitan Life. Under the revised facility, the blended interest rate on all previously-disbursed amounts under the long-term note was reduced by 26 basis points, and the fist rate term of the note was extended by 44 months, while the spread on the revolving line of credit under the facility was reduced by 25 basis points.

 

This deal by Gladstone adds a new permanent crop to its portfolio, increasing diversification with the goal of protecting the company’s asset based and income to support distributions. It also represents the first time Gladstone has entered into a revenue-sharing structure that the company believes will add to future profits.

 

Gladstone currently owns 41 farms totaling 14,876 acres across six U.S. states valued at approximately $261 million. Its portfolio of properties is mainly concentrated where tenant-farmers grow high value row crops such as vegetables and berries, but also includes land dedicated to permanent crops including blueberries and almonds. Since its initial public offering in January 2013, Gladstone has paid 31 consecutive monthly cash distributions on its commons stock, with its current yearly per-share distribution standing at $0.48.