Farmland Partners to release free agents following AFCO merger

Implications of the recently-announced merger with American Farmland Company dominated discussion on Farmland Partners' Q3 conference call.

Just one American Farmland Company (AFCO) employee will be retained on staff following its imminent merger with Farmland Partners, according to the latter’s chief executive Paul Pittman.

Speaking on Farmland Partners’ third-quarter earnings call Thursday, Pittman revealed that a dozen other AFCO employees will be let go. AFCO president and chief investment officer Robert Cowan will join Farmland Partners as president, according to the original announcement of the merger.

Tripp Nuetzal, an AFCO associate vice-president who will leave the firm, confirmed the news of Cowan’s new position. Other employees listed on the AFCO website include CFO Geoffrey Lewis and chief administrative officer Lindsey Sichel.

Paul-Pittman
Pittman

Meanwhile, AFCO chairman Dixon Boardman and chief executive Thomas Gimbel are expected to join the Farmland Partners board.

Pittman reported that the transaction is supported by both firms’ boards of directors and expects it will be approved and completed during the Q1 2017.

Pittman also noted that farmland acquisition activity by Farmland Partners would likely slow as a result of the internal focus following the merger, though the company would still seek out new opportunities.

“We want to avoid, as a company, trying to pick winners and losers between almonds and avocados and corn and beans and put investors into a broad, diverse and safe portfolio that represents that food demand story,” Pittman said.

Following the merger, Farmland Partners will be the largest publicly traded farmland company in the US, with $850 million in domestic assets, Pittman said.

Three-quarters of the combined company’s farmland will be devoted to row crops with the remainder growing specialty crops.

Despite widespread pessimism, farmland values in the US have declined only moderately in the face of a highly-challenged agricultural production environment, Pittman said.

He cited the USDA’s annual land values survey as reflecting only a 0.3 percent decline for farmland real estate (which includes buildings and infrastructure) and 1 percent decline in cropland, despite sharp price drops for agricultural commodities.

Overall, Farmland Partners reported $100,000 in net income for Q3, down from the $900,000 reported in the same period of 2015, a decrease that was attributed to due diligence costs related to the AFCO merger.

In Q3, the company acquired six farms spread across five states totaling 3,444 acres for an aggregate price of $17.7 million, according to its earnings release.

A Farmland Partners representative did not return a message seeking further comment.