Rabo AgriFinance, a subsidiary of Dutch lender Rabobank, has agreed to provide term-loan financing of up to $80 million to Farmland Partners, the largest farmland REIT in the US.
The first tranche, a $66.4 million term loan that has already been disbursed, matures in 10 years and bears interest at a floating rate of one month LIBOR plus 1.7 percent, the firm said. Within 60 days of the credit agreement, Farmland Partners will be required to fix the base interest rate on 50 percent of the loan balance with an interest-rate swap agreement.
The option for an additional $13.6 million – the second tranche – will be available until January 1, 2019, subject to conditions. “The key condition is providing satisfactory collateral which is a routine process,” David Ronco, a spokesman for Farmland Partners, told Agri Investor.
“This term loan replaces $81.1 million of borrowing from FarmerMac that has/is maturing this year,” Ronco explained, referring to the government-sponsored entity also known as the Federal Agricultural Mortgage Corporation.
This latest round of financing comes four months after Farmland Partners raised $144.2 million through the issuance of a little over 6 million preferred shares, whose proceeds were earmarked for future farmland acquisitions. In September, Farmland Partners drew $110 million from the fundraise to acquire 5,100 acres of nut orchards from Singapore-listed Olam Group.
“Between this financing and the Series B Participating Preferred issue, we have meaningfully expanded and diversified the company’s sources of capital,” Farmland Partners’ chief executive Paul Pittman said.
According to Ronco, holders of the preferred shares earn a 6 percent annual coupon on the shares’ $25.00 liquidation preference. In addition, they accrue half of US national farmland appreciation per the USDA annual land survey on their liquidation preference. “The preferred shares are not callable for four years,” he said.
Based in Denver, Farmland Partners’ portfolio includes roughly $1 billion in real estate assets totaling over 160,000 acres across 17 states and about 30 crop types. These include corn, cotton, citrus fruit and wine grapes, according to a presentation the company published in June. Located in states such as Alabama, Arkansas, Florida, Kansas, the Carolinas and Virginia, the properties are farmed by 125 tenants.