The firm distributing a non-listed preferred stock offering from Gladstone Land expects it could add as much as $500 million to the NASDAQ-listed farmland REIT’s balance sheet over the next three to four years.
Gladstone entered into an agreement with Atlanta-headquartered Timbrel Capital in mid-April to distribute non-listed preferred stock offerings for Gladstone Land and Gladstone Commercial Corporation, an affiliated office and industrial real estate-focused REIT.
Timbrel managing director Amanda Teeple told Agri Investor that since roughly 2015, registered investment advisors (RIAs) and broker-dealers in her network – many of whom are Midwest-based – have expressed interest in expanding agricultural exposure for the family offices, accredited investors and individuals they advise.
“All of these advisors and their clients were calling and saying, ‘I really like farmland,’ and we never could offer them anything until Gladstone came out,” she said.
Though some RIAs have accepted minimum investments of as little as $5,000 into Gladstone’s preferred stock offerings, said Teeple, individual investments have generally ranged from $100,000 to $250,000 and reached as high as $10 million.
Under the terms of Gladstone’s $500 million Series C preferred stock, investors will receive a 6 percent annual return and the non-listed preferred stock will become part of Gladstone Land’s capital stack, according to Teeple. In the event of a liquidation of the company’s assets, she added, investors in the preferred stock would be junior to Gladstone’s debt providers and senior to common stockholders.
Its terms dictate that the Series C must be listed on a public market within one year of reaching its $500 million capital target, or before a mid-2025 termination date if the target is not met.
Teeple explained that while working with another firm, she helped distribute a 2018 Series B offering targeting $150 million for Gladstone Land. That offering secured its target within 18 months, she said, helping demonstrate the demand for farmland investment among retail investors.
“[Farmland] is something that sells through recessions,” said Teeple. “Investors just love it and an easy story to tell is an easy story to sell, so our wholesalers really enjoy telling the story. It gets advisors on the phone and it gets clients on the phone.”
Teeple expects most of the approximately 50 RIAs and broker-dealers that sold Gladstone’s Series B offering will also distribute the Series C, which she said is likely to reach its $500 million target within three or four years.
Gladstone’s deepening involvement with retail capital, she added, comes as many private investment firms are using similar offerings to give alternatives exposure to a wider array of investors. Highlighting offerings from firms including The Blackstone Group and Ares Asset Management, Teeple said retail capital has characteristics managers find attractive.
“When you are able to get a following of retail investors, it sticks with you as long as you are successful and doing what you say you are going to be doing,” she said. “If you don’t mess that up, that retail capital is going to stick with you. It’s not going to come in lumps, like the institutional money may. You are not having to deploy $20 million on March 1 and another $50 million on June 1, it’s trickling in on a daily basis.”