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Gladstone acquires organic potato operation

The $26m acquisition adds more than 6,000 acres to the farmland REIT's horticulture-focused portfolio.

Real estate investment trust (REIT) Gladstone Land has acquired 6,190 acres of farmland through a sale-and-leaseback agreement with organic potato producer Mountain Valley Produce for $25.9 million in cash and stock units.

The land, spread across 39 pivot-irrigated fields in Colorado, will be used primarily to grown organic potatoes. Most of the land is either already cultivated organically or in the process of conversion.

Bill Hughes, the REIT’s director for the Midwestern US said described Mountain Valley Produce as  “an innovator in the potato industry and […] leaders in water conservation.”

The REIT focuses on buying land for speciality annual and permanent crop production, rather than major grains. A recent report from the US Department of Agriculture forecasts US horticultural exports to increase by 2 percent in 2016, in contrast to steep declines in exports for major grains.

Also, organic crops can net significant premiums over their conventional counterparts, but specialised organic techniques and a certification process that takes three years are barriers to conversion for many US farmers.

“We like the organic crops this farmer is growing and know the organic potatoes will be in high demand,” said David Gladstone, president and chief executive.

The company also announced that it has secured two 7-year bonds from Farmer Mac for a total of $15.5 million at a 3.05 percent interest rate.

In 2013 Gladstone Land issued a $50 million IPO, making it the first publicly traded real estate investment trust focused entirely on farmland. The company’s total assets have increased from $90 million in the first quarter of 2013 to $311 million. Gladstone now owns 46 farms, comprising 23,000 acres across seven US states.