Farmland Partners pays $110m for nut orchards a month after fundraise

The US’s largest farmland REIT will draw from the $144m it collected in August to buy the assets from a Temasek-owned agribusiness.

Farmland Partners, the largest farmland real estate investment trust in the US, has acquired 5,100 acres of nut orchards from Singapore-listed Olam Group for $110 million.

In addition to the transfer of the California-based almond, walnut and pistachio orchards, the two parties have entered into a 25-year lease agreement. Once the acquisition closes – expected by end of November – Olam will operate and maintain the orchards for 25 years, paying Farmland Partners a share of annual revenues. Financial details about the lease and revenue-sharing agreement were not disclosed. The companies were not immediately available for comment.

The announcement comes a month after Farmland Partners raised $144.2 million through the issuance of a little over 6 million preferred shares. Net proceeds for the offering were earmarked for future farmland acquisitions, the Denver-based company said at the time.

“The properties and associated agreements will bring higher return permanent crop production into our portfolio, furthering our goal of delivering a well-balanced portfolio of US farmland to our stockholders,” Farmland Partners chairman and chief executive Paul Pittman said of the Olam transaction.

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The firm’s portfolio includes nearly $1 billion in real estate assets totaling over 154,000 acres across 17 states and about 30 crop types. These include corn, cotton, citrus fruit and wine grapes, according to a presentation the company released in June. Located in states such as Alabama, Arkansas, Florida, Kansas, the Carolinas and Virginia, the properties are farmed by over 110 tenants.

For Olam, the transaction is in line with its strategy of pursuing an ‘asset-light model.’

“We have built a sizable portfolio of prime orchards and have adopted sustainable and industry leading agricultural practices in managing these orchards,” said Ashok Krishnen, Olam managing director and chief executive of Edible Nuts. “We had been looking for the right partner who sees the long-term value of farming, while we are looking for an asset-light model to participate in the production economics of the tree crops.” However, Olam will continue to invest in growing almonds, pistachios and walnuts in California, he noted.

Majority-owned by Singapore’s sovereign wealth fund Temasek, Olam manages 2.4 million hectares of land in 70 countries. In addition to nuts, the company – whose other major shareholder is Mitsubishi – is also active in cocoa, spices, vegetable ingredients, coffee, cotton and rice.