Pure Cycle, a vertically-integrated wholesale water and wastewater service provider, will sell 14,600 acres of farmland and water interests to Arkansas River Farms, an affiliate of real estate developer C&A Companies and real estate private equity firm Resource Land Holdings, for $53 million.
The irrigated farmland is fully leased to tenant farmers growing alfalfa hay, corn, wheat, sorghum and other grain crops, according to Mark Harding, president and chief executive of Pure Cycle. It also has substantial water interests which has raised concerns for local farmers, according to local media.
Pure Cycle is not divesting its agricultural leasing business because it’s unprofitable, Harding told Agri Investor. “If the deal didn’t close we would continue to have it in the portfolio and manage it,” he said. He also noted that Pure Cycle hadn’t been “shopping” for a buyer. “We see a mutually beneficial opportunity for both parties and we want to go with it.”
The company plans to use about $6 million of the proceeds to pay down debt and $6 million to invest in the WISE Project. The project interconnects water systems between 13 Denver-area water providers and has recently been completed.
“This sale will expand our opportunities to develop water and infrastructure from our Denver portfolio assets… We continue to work to identify a development partner with expertise in developing projects of this size to bring this project to market,” Harding said in a statement.
Arkansas River Farms will have a 60-day due diligence period, subject to one 30-day extension, and the deal is expected to close in mid-June.
Neither C&A or Resource Land had responded to requests for comment by press time.