Fundraising

Gladstone offers up to $150m in preferred B shares

President and chief executive David Gladstone said the farmland REIT hopes to avoid the temporary drag on earnings that can come with a typical offering.

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Gladstone Land Corporation has filed to offer up to $150 million in Series B preferred stock that it hopes will support a reduction in existing debt and fund future operations without diluting existing common stockholders.

The Maclean, Virginia-headquartered farmland REIT said that up to 6 million shares would be offered at $25 per share by its affiliate, Gladstone Securities. Gladstone expects the move will net the firm $131.3 million in proceeds after dealer management fees and commissions are paid.

Gladstone president and chief executive David Gladstone said the Series B offering would allow the company to continue “growing well into the future at a steady rate” in a way that will support the price of the common stock. The company intends to sell some or all of the $150 million allotted for the Series B offering within the next five years.

“We believe this is a nice way to raise capital at a pace to allow for it be invested in a more timely manner,” Gladstone said. “Shares of the Series B preferred stock will be sold on a ‘reasonable best efforts’ basis over a certain period, which should allow us to invest the new capital as the small amounts are received, as opposed to receiving a large amount of capital all at once from a typical offering, which can create a drag on earnings.”

Gladstone’s $534 million farmland portfolio contains 63,014 acres on 73 properties located in nine different US States.

Chief financial officer Lewis Parrish said during the firm’s third-quarter earnings call in November that after taking into account updated farm valuations and the fair value of debt and preferred stock, Gladstone’s net asset value per share as of the end of September was $14.15 per share. The firm’s stock, which is traded on the NASDAQ exchange, closed at $13.39 per share on Friday.

“We hope our stock price will rise in the future so that we trade at least at, or above, net asset value,” Gladstone added. “So, if you’re buying the stock today, you’re getting a small discount.”