After making its first foray into the crop last summer, Gladstone Land Corporation has paid $12.1 million in a combination of cash and stocks to add an additional hay farm to its portfolio.
The farmland REIT has acquired 16,595 acres of farmland for $9.1 million in cash and $3 million in stock. The land is located on a continuous farm in southeastern Baca County, Colorado.
Gladstone entered into a triple-net lease agreement through 2020 with the existing operator to continue growing a high-fiber hay blend for the cattle industry, with an additional five-year extension option, according to a company statement, which said the deal provides for annual rent escalations and an overall capitalization rate of 5.9 percent.
“The soil on this farm is ideally suited to grow high-quality crops to serve the cattle industry,” said Gladstone chief operating officer David Gladstone. “This acquisition was another opportunity to partner with a very strong tenant, diversify our portfolio and add additional farm owners as investor.”
Gladstone managing director Bill Hughes added that the purchase reflected a commitment both to a new region and a new crop specialty. While much of Gladstone’s 58-farm portfolio is concentrated on horticultural crop production — in Florida, California and five other states — this transaction marks just its second investment in hay production. In August, Gladstone paid $11.4 million in a combination of cash and company stock for 7,384 acres of Colorado farmland devoted to alfalfa and native grass hay.