In its first acquisition in Texas, NASDAQ-listed Gladstone Land Corporation has purchased a 3,667-acre potato property for $8.5 million.
Located in northern Hartley County, the property contains 2,220 irrigated acres that are currently devoted primarily to chip potatoes under a lease with CSS Farms, a family-owned business with operations across 13 US states.
Bill Hughes, a managing director at the McLean, Virginia-headquartered farmland REIT, said Gladstone plans to expand its partnership with CSS into other parts of the country and had been looking for properties in Texas for some time.
“This farm is in a prime growing location and has very good water, with 12 wells and 13 pivots on site,” Hughes said. “While the main crop grown on the farm is chip potatoes, the tenant also grows some corn and wheat in their regular location.”
In the neighborhood
Kyle Amos, president of College Station, Texas-headquartered land management firm Highfield Farm Asset Services, told Agri Investor that as a crop, potatoes are widely seen as offering attractive yields and quality. That reputation, Amos said, has helped attract potato-focused operations such as Frito-Lay and Larsen Farms, a vertically integrated potato operation, to establish a presence in the region.
“They are enjoying the benefits of being in Texas,” said Amos.
Although Texas is generally not a very active market for institutional farmland investors, Amos said, the property purchased by Gladstone is adjacent to others owned by UBS Agrivest and the Hancock Agricultural Investment Group.
“These are the most significant players that there are in the region; in that small region,” said Amos.
Amos, who spent two years as an acquisitions manager at Hancock before founding Highfield in 2010, according to his LinkedIn profile, said that Texas land markets are influenced more directly by conditions in the oil and gas industry and the fortunes of the cattle sector than by developments in agricultural commodities markets.
As opposed to more active markets in the Midwest, Amos explained, institutional investors in Texas farmland face headwinds in the form of large tracts that limit the likely exit options to other institutional buyers, and a general lack of many such buyers.
“Texas lacks the liquidity for farmland that other places enjoy,” Amos summarized. “It’s not that people don’t want to buy a farm in Texas; it’s that they don’t want to buy the wrong farm in Texas.”