The US farmland REIT paid $5.4m to purchase White Hawk Vineyard, a California winery where the company hopes to more than double production.
Gladstone Land Corporation has bought a 361-acre vineyard in Santa Barbara County, California, for about $5.4 million in its first wine investment.
The US farmland real estate investment trust has entered into a 10-year triple net lease with an unidentified operator for the White Hawk Vineyard, which consists of 75 planted vineyard acres. Plans call for 190 of the remaining plantable acres to be developed into vineyard acreage, with Gladstone to fund the development costs and earn rental income, according to the firm.
Gladstone managing director Bill Reiman declined to quantify potential rental earnings or development costs associated with developing the additional acres at the vineyard, where he said about 100 acres are either too steep or rocky for further development. Reiman said Gladstone hopes to complete planting of additional acres by the end of April 2018.
He told Agri Investor that the operator is a very large wine grape producer which also grows other crops on an existing Gladstone property. He added that Gladstone had been in dialogue with the company before the purchase and found it fitted well with the company’s geographic focus.
“We’re pretty much a tenant-driven business model,” Reiman said. “As we’ve grown and our portfolio of properties has grown, our portfolio of tenants has grown as well. The more different folks we do business with, that leads to more opportunities.”
While the purchase of White Hawk Vineyard marks Gladstone’s entry into the crop, Reiman said the company has looked at many winegrape properties in recent years and had at one point even considered investing in a wine production facility.
He also highlighted the real estate values in the region surrounding White Hawk Vineyard, which he said position the investment to benefit from potential development of surrounding residential and equestrian estates.
“Between Santa Barbara and San Luis Obispo counties, that’s a real estate market that has really high value, typically low rents, so it is a very low-cap-rate region, which is very difficult for us to break into,” he said. “So, when we find a deal that gets us there, we’re going to snatch it up pretty darn quick.”
Reiman said Gladstone would continue to look for opportunities to buy vineyards in the region.
The deal continues a strong pace of acquisitions this year for Gladstone, which last month added cabbage to its portfolio through the $9.7 million purchase of a 1,910-acre farm in Florida.
In July, the REIT paid $13.6 million for four contiguous pistachio and almond farms in California after spending nearly $30 million in June for six farms spread across North Carolina and south-western Arizona.
Gladstone’s total portfolio contains 71 farms spread across eight states, with a cumulative value of approximately $522 million.