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American Farmland exploring strategic options

The publicly traded REIT hopes to boost its share price, following an underperforming IPO.

New York Stock Exchange-traded real estate investment trust (REIT) American Farmland Corporation is investigating “strategic alternatives” to bolster slumping share-prices, which could include sale of the company and its assets, a merger of the company or joint venture arrangements.

AFC went public through a $48 million IPO in October 2015, which fell short of the company’s expectations, raising less than half of its initial target of $100 million.

Shares of AFC stock have failed to reach their initial offering price of $8 since falling to $6.93 on their first day of trading. As of press time the current share price sits at $7.05. With roughly 16.9 million shares trading at close on April 14, the company’s market cap sits at $119 million, down from $135 million at the time of the IPO.

The company, which acquires high-value US farmland heavily weighted toward permanent and speciality crops, is the most recent of the three publicly traded farmland REITs. Its entrance into the market came amid a downwards trend in commodities prices and growing concerns over US farmland values. However, the horticultural products that are the basis of the company’s investment strategy have fared well.

In December 2015, the company made a $65 million acquisition of California orchards, which the company touted as increasing the total value of its farmland assets by more than 30 percent. Its portfolio comprises 22 farms located on the East and West Coasts and the Corn Belt and Delta regions, consisting of approximately 18,322 gross acres of farmland, with more than 21 major crop types.

Citigroup Global Markets and Raymond James & Associates will serve as financial advisors to the REIT, and Goodwin Procter will act as legal counsel.