Gladstone Land announced it has acquired 1,280 acres in Baca County, Colorado for $900,000. The land in question is adjacent to farmland already owned by Gladstone, and will be used to expand the company’s production of hay to supply cattle feedlots across the Southern Plains and Southwest U.S.
Upon closing, Gladstone will enter into a four-year, triple-net lease with one of the leading farm operators in the region, according to the company.
This deal will build upon previously announced deals by the company.
In August 2016 the company announced the acquisition of 7,284 acres in Colorado for $6.5 million – an initial deal that added high fiber hay as a new crop to the Gladstone portfolio.
Later, in December 2016 Gladstone acquired another 16,595 contiguous acres of farmland producing high-fiber hay in Colorado for $9.1 million in cash and 233,952 common shares of limited liability partnership interest in its operating partnership for a total consideration of $12.1 million.
At the time, Bill Hughes, Midwest managing director with Gladstone Land, said, “Adding this purchase to our earlier acquisition in Baca County strengthens our commitment to a new region and a new crop specialty.”
Commenting on the latest high fiber hay farmland deal announced October 2, Hughes said, “We are happy to be able to add this property to our portfolio. Although it’s a smaller deal for us, it demonstrates our commitment to our tenant-farmers and our willingness to assist them in growing their operations.”
Colorado’s feedlots feed about 2.3 million head of cattle per year according to the Colorado Cattlemen’s Association. The state has 11,600 farms with cattle and calves, 206 feedlots, and 24 USDA-certified slaughterhouses, and is the fourth largest exporter of fresh and frozen beef in the country.
Meanwhile, in Arizona, the cattle industry accounts for 5 percent of the state’s gross product, reflecting an economic impact of $2.8 billion, according to the Arizona Cattlemen’s Association. The state’s feedlots and ranchers produce $437 million worth of cattle each year, and in rural regions of the state, the cattle industry can account for up to 75 percent of the gross product.
This deal brings Gladstone’s portfolio to a total of 73 farms with 63,074 acres across nine U.S. states, valued at approximately $532 million. A good amount of this portfolio has been built up over the past year.
A benchmark was achieved by Gladstone in January of this year, when the company made its largest land deal in the company’s history – acquiring 3,750 acres of organic farmland in southern Florida for $54 million. The company had secured a 7-year lease with a leading regional vegetable grower and marketer that included clauses for annual rent escalations and options for three, five-year extensions.
Following in June of this year, the company expanded into a new region of Arizona through its acquisition of four farms in the southwest region of the state totaling 3,253 gross acres with 3,032 irrigated, of which a portion is certified organic for $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. “These farms have a total of 19 wells onsite, giving them access to plenty of water, and this transaction allowed us to partner with yet another top grower.”
Gladstone’s portfolio expanded into another new region in June of this year when the company announced it had acquired two contiguous organic farms totaling 310 acres in North Carolina for $2.2 million.
Expansion for Gladstone is not only about portfolio building, but is also about supporting their tenants in realizing their goals for expansion themselves.
“This acquisition was completed at the request of an existing tenant to allow them to continue growing their farming operations, providing further evidence of us always standing behind our tenant-farmers,” said David Gladstone, president and CEO of Gladstone Land. “Similar to our other purchases in Colorado, the soil on this farm is ideally suited to grow high-quality crops to serve the cattle industry. This acquisition is expected to yield strong returns for us and was another opportunity to strengthen our relationship with a very strong tenant and further diversify our farmland portfolio. We just completed another active quarter, and we expect to remain so over the next few months, so please stay tuned.”
-Lynda Kiernan