Gladstone Land has brought its farmland portfolio to 56 farms with the acquisition of two large scale almond orchards in Stanislaus County and Merced County, California.
The properties which collectively total 2,485 acres were acquired for approximately $23.4 million in cash and 343,750 common unit of limited partnership interest in Gladstone’s operating partnership. With each unit valued at $12, the total consideration for the orchards was approximately $27.5 million.
“This completes our second farmland acquisition in the past two weeks, each of which involved a significant amount of OP Units that were issued as partial consideration for the total purchase price,” said David Gladstone, President and CEO of Gladstone.
A Portfolio Building Year
Only weeks ago, Gladstone announced it had agreed to acquire 7,384 acres of farmland in Colorado for $4.9 million in cash and the issue of 125,677 common units of limited partnership interest in the company’s operating partnership, bringing the value of the deal to $6.5 million.
The property, which grows high-fiber, low-protein hay for the cattle feed lot industry, introduced a new crop into Gladstone’s portfolio, and together with the acquisition of the two almond orchards, builds upon what had been a portfolio-building year for Gladstone.
Other acquisitions made by the company this year include the acquisition of a 70-acre strawberry farm in Florida for $1.7 million, and the acquisition of 401 acres of farmland in St. Lucie County, Florida producing green beans and bell peppers for $5.1 million. In April the firm acquires 453 acres in Fresno, California, of which 435 were planted in pistachio trees (another new crop for the company), for $15.5 million, and in March Gladstone acquired 6,190 acres of organic, and soon to be organic farmland in Colorado for a total deal consideration of $25.9 million.
Low-Risk Addition
Bill Reiman, Gladstone Land’s Western Managing Director, states that the company sees the acquisition of the almond orchards as being low-risk additions as the deal is structured with two long-term triple-net leases that include annual CPI increases and upward rent adjustments every five years.
“The lease terms provide for rent escalations that we feel confident will provide for excellent, safe returns for many more years,” said Reiman. “While this purchase increases our position in the almond industry, it also adds a strong, cash-rent lease with a very large, international tenant.”
The trees on both farms are about nine years old, a time when almond trees are beginning to come into peak production, and both farms have strong access to water from wells and on-site reservoirs according to Gladstone.
“Our experienced deal team continues to find great farmland investment opportunities focused on high-value, income-producing properties that are currently generating strong crop revenues,” said David Gladstone, adding, “Please eat more almonds; they are a healthy food!”
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Lynda Kiernan