Real estate investment trust Gladstone Land has bought two large almond orchards in California for approximately $23.4 million in cash and 343,750 common units of limited partnership interest (OP units) in Gladstone’s operating partnership, valued at $27.5 million.
“The trees on both farms are approximately 9 years old, just beginning their peak production,” said western managing director Bill Reiman. “We view these acquisitions as low-risk in that they come with long-term leases with an outstanding [large, international] tenant. The lease terms provide for rent escalations that we feel confident will provide for excellent, safe returns for many more years.”
The deals also strengthen Gladstone’s position in the almost industry, a sector where the REIT sees long-term demand growth because of increasing demand for healthier foods, according to Reiman.
Gladstone, which focuses on permanent and specialty crops like nuts and berries, has previously acquired properties in Stanislaus and Merced counties, where the farms are located. Its acquisition strategy includes using a network of operators who recommend acquisitions to the company, as well as offering farmers REIT shares, chief executive director David Gladstone previously told Agri Investor. Over half of acquisitions are also lease-back deals.
“This completes our second farmland acquisition in [recent] weeks, each of which involved a significant amount of OP units that were issued as partial consideration for the total purchase price,” said David Gladstone in a statement. Earlier last month, the REIT acquired 7,384 acres of dryland across five farms in Baca County, Colorado, where it intends to grow hay crop for the feedlot industry.
Gladstone also said that the new orchards have good water access, including on-site wells and reservoirs.
Gladstone is one of three public US farmland REITs listed on the New York Stock Exchange, with rivals Farmland Partners and the smaller American Farmland Company set to merge within the next five months.
Farmland Partners founder Paul Pittman told Agri Investor last month that until farmland REITs can increase significantly in size, their stock value will continue to trail behind the real value of assets under management. His company is currently the largest farmland REIT in the US.
Gladstone Land went public with a $57 million offering in January 2013. It estimates the fair value of its US farmlands to be worth around $377 million, and put the net asset value of the company at $13.68 per share in June.
Its almond properties include Bear Mountain Road in California, which has 841 acres planted with new almond trees this year. Most of Gladstone’s California farmland is focused on mixed fruit and vegetable production, with some lemon, pistachio and almond orchards.