Gladstone ends 2020 with $192m of Q4 deals

Managing director Bill Reiman says covid-19 disruption delayed deal closures but increasing farmer interest in sale/leaseback helped the firm match its 2019 capital spend.

Gladstone Land completed $192 million in farmland acquisitions during Q4 2020, $156 million of closed in December, said the firm’s chief financial officer.

“We obviously didn’t plan to do basically a full year’s worth of acquisitions in one sole month, but that is how the cards fell for us,” Lewis Parrish told Agri Investor soon after Gladstone announced its purchase of a 160-acre citrus property in Tulare County, California for $4.2 million on January 4.

Parrish said the Virginia-headquartered REIT completed $256 million in acquisitions in 2020, an almost identical sum to the $255 million completed in 2019.

“I’m not sure that we’re ready to announce $250 million of annual acquisitions is our normalized number, but it definitely has been a great two years,” he added. “We have almost doubled our portfolio size from the end of 2018, so we are very proud of that and pleased with our growth.”

The series of deals closed at the end of 2020 reflected pandemic-related delays that impacted sellers, appraisers and other third parties needed to close sales, rather than any significant shift in the market, said Gladstone managing director Bill Reiman.

“People were working from home. Business just got bunched up and there was a pause put on things in life. That had an impact on how our pipeline progressed and things just ended up getting bunched up naturally,” he told Agri Investor. “We hope we never do that again, it’s just not sustainable. It’s just how they all fell this year, so we had a job to do and we got it done.”

Parrish noted that deal activity during each of the past two years had started slow in H1, before ramping up. That was especially the case  in 2020, he said.

In September, Gladstone entered the Mid-Atlantic region with its purchase of 939 acres in Delaware and Maryland for $7.4 million. Later that month, it announced an acquisition of a 2,515-acre property in California comprised of organic farmland and pistachio orchards for $31.8 million.

Early October saw another $31.8 million acquisition, this time of an 801-acre pistachio property in Fresno, California. Later that month, Gladstone announced a deal for 597 acres of farmland and related facilities intended for almonds in South Carolina for $3.8 million.

Gladstone then closed three deals in California between December 14 and 17 with a combined value of almost $90 million. The firm first purchased 236 acres in Fresno County from an existing tenant for $3.6 million; a $20.8 million acquisition of a 368-acre vegetable property in Ventura County followed; a $61.5 million acquisition of 4,462 acres in Tulare County, planted in a mixture of almonds and pistachios alongside both conventional and organic pomegranates, capped the three deals.

No price was disclosed for a subsequent acquisition announced on December 28 of 1,670 total acres in San Joaquin County, California and Whatcom County, Washington that included 1,390 acres of organic and conventional blueberries and a related processing facility.

Another factor feeding the pace of Gladstone’s transactions, added Reiman, is the increasing receptivity among producers to sale/leaseback deal structures. Most of the deals closed in December, he said, were the result of years-long outreach to producers about how the structure can free up capital to expand operations.

“We’ve been waving that flag for years now and the results you are seeing today is because of that hard work,” he said. “A lot of the deals in the past two years, and probably going forward, are people seeing other folks in the industry they respect doing a deal with us and thinking, ‘Huh, if it works for those guys, I have to figure out how it can work for me.’”