Gladstone acquires $4m-worth of Florida farmland

Real estate investment trust (REIT) Gladstone Land has acquired 691 acres of Florida farmland for $3.8 million.

The deal includes 390 farmable acres, which Gladstone has leased to an undisclosed grower and marketer of fresh vegetables, according to a press release. The 6-year lease provides for annual rent increases and an option for a 6-year lease extension. The farmland, located in the Immokalee farming region of Hendry County, Florida, will produce green beans and bell peppers.

The acquisition brings Gladstone’s total holdings to 42 farms in the US, and their primary focus is on fruits and vegetables.

“We enjoy owning land that grows fresh fruits and vegetables that are healthy for people to eat,” said the company’s chief executive David Gladstone in a statement. “We seek to build our company on the idea that the produce section of the grocery store is a good place to base our business, because yields on fruits and vegetables have been growing at a stronger pace than other areas,” he added.

Frisbie told Agri Investor that before the sale the land was used for watermelon farming. Under Gladstone’s ownership it will be used to produce green beans and bell peppers. The change to green beans and bell peppers is at the discretion of the operator, who Frisbie says has significant experience cultivating those crops.

The acquisition comes in addition to other investments in five farms totalling 3,413 acres in the quarter ending 30 September, according to a third-quarter earnings report filed with the Securities & Exchange Commission. The investment brings Gladstone’s total land holdings to 15,581 acres spread across six US states, with a total value of $265 million, according to the release.

News of the acquisition comes alongside the release of third-quarter earnings that showed year-over-year increases in total assets, operating revenues, shareholders’ equity and distributions in excess of earnings. The report also showed strong quarterly gains in funds from operation and adjusted funds from operations per share, two REIT-specific measures of performance meant to account for atypical depreciation of income-producing real estate.

The encouraging numbers come on the heels of a less than stellar IPO by the latest entrant into the publicly-traded agri REIT space. American Farmland issued six million shares in October for a total of $48 million, significantly below the company’s initial target of $100 million. Stock prices for all three of the publicly-traded REITs have been trading below their mid-year highs over the past month.

In 2013 Gladstone Land issued a $50 million IPO, making it the first publicly-traded real estate investment trust focused entirely on farmland. Since then the company’s total assets have increased from $90 million in the first quarter of 2013 to $219 million in the third quarter of 2015, an increase of 143 percent. Operating income increased from $376,478 to $1,167,653, a 210 percent increase.