Gladstone Land has acquired a 1,000 gross acre California pistachio property in a $33 million deal, which the company said is the first of two related transactions. The second acquisition is expected to be larger and is slated to close in the fourth quarter.
Located in the central Californian city of Coalinga, the acquired property is planted with 911 acres of mature pistachio trees, which have just reached peak production, chief executive David Gladstone said in a statement.
Gladstone Land, a McLean, Virginia-headquartered REIT that trades on the NASDAQ exchange, entered into an eight-year triple-net lease on the property with RTS Agri Business and Canoas Creek Pistachios as part of the acquisition.
“This is a large holding with its own solar facilities to help reduce energy costs, and the farm has added value to the water infrastructure that allows the grower to deliver surface water to the orchard,” added Gladstone managing director Bill Reiman.
Though water is always a key consideration for any farmland property, California ag producers and investors alike have recently placed a greater emphasis on surface water, as the result of ongoing implementation of the 2014 Sustainable Groundwater Management Act (SGMA), Rod Stiefvater of RTS Agribusiness told Agri Investor.
Stiefvater, who in the mid-2000s developed the Coalinga property Gladstone purchased, will now operate it under the lease.
Irrigation districts throughout California are currently taking the lead, Stiefvater said, in working with municipalities, which have until the end of this year to formulate long-term plans for managing water resources, as required by the 2014 SGMA.
Because the legislation aims to ensure sufficient groundwater levels by regulating how much water can be pumped, areas with abundant surface water will see less direct impact, Stiefvater explained. Whereas the northern Sacramento Valley draws surface water fed by higher rainfall levels, agriculture in the San Joaquin Valley is more reliant on groundwater.
Adjustments to a more water-regulated future will happen gradually and are only just beginning, Stiefvater said, though their ultimate effects will be dramatic.
“Water is probably going to get a fair amount more expensive,” he said. “You are going to have to move up the profitability rank in order to handle the increased costs of water. It will change agriculture down here more so than it has been changed in some time.”