US farmland real estate investment trust Gladstone Land is buying 7,384 acres of Colorado farmland for $11.4 million in company stock and cash.
The deal includes a lease-back agreement with the previous owner to produce alfalfa and native grass hay on the land until 2020.
Gladstone will pay $4.9 million in cash and $6.5 million in operating partnership units for the farm when the deal closes in September.
Gladstone chief executive David Gladstone recently told Agri Investor that offering operating partnership shares in farmland acquisitions has made the REIT a more attractive buyer for many family farmers looking to sell their operations.
“The farmer doesn’t have to pay taxes when he trades his farm for [operating shares],” he said. “They only pay taxes when they sell the shares, and get a dividend for as long as they hold them, [meaning] the farmer winds up saving on taxes.”
Gladstone focuses primarily on buying land for high-margin horticultural crop production and is heavily weighted in California and Florida farmland. It also carries a small portfolio of other crop classes to support its strategy of regional and crop diversification.
The acquisition in south-east Colorado would be the company’s first operation focused on hay production and its fourth buy in the state of Colorado.
“Completing this purchase in a new region and crop specialty will expand our geographic footprint and further diversify the crop types on our farmland holdings,” Gladstone Land’s Midwest marketing director Bill Hughes said.
Gladstone is preparing a $25 million public offering of fixed-term preferred stock this month to pay off existing debts and fund other corporate activities.