Gladstone acquires pistachio property for $28.6m

California legislation of groundwater may be harming the value of such properties, says The Specialty Crop company’s Kevin Herman.

Gladstone Land Corporation has purchased a 930-acre farmland property devoted to pistachios in Chowchilla, California, for $28.6 million.

The NASDAQ-traded REIT announced this month it had purchased the property, for which Gladstone immediately entered into a 10-year triple-net lease with The Specialty Crop Company, a Madera, California-headquartered farm services and development company that focuses on fresh and dried figs, among other crops.

In November, the two companies collaborated on Gladstone’s $23 million acquisition of a 951-acre property in Madera County devoted to figs and pistachios for which The Specialty Crop Company also entered into a 10-year triple-net lease.

Gladstone’s new property contains 852 acres planted with pistachios in their 11th leaf that are supplied by both surface and well water.

Gladstone president and chief executive David Gladstone labeled pistachios “an exciting growth area” for the firm due to the tree nut’s status as a health food and supportive growing conditions in the region.

The Specialty Crop Company founder Kevin Herman told Agri Investor that after the November transaction, his firm had agreed with Gladstone to keep looking for other properties the two companies could work together on.

“Rumor had it that a lot of folks were kicking tires,” Herman said of the pistachio property Gladstone acquired earlier this month. “It was primarily local growers, but the size of the property was so significant that it would be difficult for a local grower to take that project on.”

Though the industry had been anticipating some negative impact from the imposition of tariffs on pistachio exports to China last year, Herman said, recent sales have indicated that trade tensions have had little impact.

“China put the big tariff on raw pistachios, but they – for whatever reason – neglected to increase the tariff on roasted and salted, so sales have continued to be strong, it’s just shifted to roasted and salted,” Herman said.

A June report within Farmer Mac’s The Feed highlighted an 11 percent year-over-year increase in domestic pistachio consumption as another important factor recently supporting the market.

As income levels for pistachio properties contained in the National Committee of Real Estate Investment Fiduciaries’ farmland index have remained consistent in low to mid-teens over the past four years, appreciation of such properties has turned negative.

Herman said one factor likely playing a role in reversing appreciation is California’s Sustainable Groundwater Management Act.

“If you have a pistachio ranch that is in the SGMA area or it relies on well-water only, those ranches have decreased in value, no doubt about it,” he said.

Herman added the Specialty Crop Company plans to continue looking for opportunities to work together with Gladstone on other permanent crop properties in California’s San Joaquin Valley.