Farmland Partners, the New York Stock Exchange-listed real estate investment trust (REIT), has signed a deal with internet giant Amazon to host a wind farm on 28 acres of its farmland which the company says could boost its rental income by more than 13 percent.
The windfarm, a development by Spanish firm Iberdrola Renewables, will be situated on two of Farmland Partners’ farms in North Carolina, and the firm will charge Iberdrola a significant premium on the cost per acre currently being paid to Farmland Partners.
The firm leases the land to a local farmer for around $275 per acre, while the 28 acres will cost Iberdrola approximately $2,600 per acre over a 25-year lease term. As a result the REIT says it expects the total rent across the 1,839 acres of leasable farmland comprising the two farms will increase by approximately 13 percent.
“Renewable energy projects have the potential to increase the returns we generate from our farm holdings. We are highlighting this transaction for investors because it is illustrative of the upside opportunities that our stockholders may derive from our ownership of farmland,” Paul Pittman, chief executive of Farmland Partners said in a statement.
The REIT said that returns from the wind farm deal may even exceed forecasts if there are changes to the consumer price index the lease is based on, and if Iberdrola undertakes additional construction beyond that which is currently planned. The own-and-operate wind farm will deliver power to the electrical grid that supplies Amazon and powers its cloud data centers.
Pittman said “other renewable energy projects under consideration” including solar power leases, as well as road projects and flyover rights. He highlighted the deal as an example of how the firm looks for revenue sources beyond traditional farm leases.
Last month the firm launched a $25 million equity offering, an offer which came a month after it had raised $35 million from investors. The firm told Agri Investor at the time that it was looking to broaden its portfolio beyond commodity crops and ultimately buy farmland outside the US. In July the REIT purchased a 125-acre blueberry farm in Michigan, the first permanent crop land in its portfolio, and in March bought farmland in Nebraska and Colorado.