REIT capital ‘reduces agri volatility’

Speaking in the wake of Gladstone's purchase of a $6m almond orchard, MetLife agri finance boss Barry Bogseth said such cash injections could help mitigate adverse demographic trends in the countryside.

REITS are often singled out as a different kind of structure, but Barry Bogseth views them as similar to any another form of capital coming into agriculture.

“They [REITs] provide supporting capital to an industry that has some volatility,” the MetLife managing director and head of agricultural finance group told Agri Investor. “By virtue of bringing this additional form of capital in, they provide a further source of soundness to the foundation that can reduce some of that volatility.”

Such support can be especially important given demographic trends that see many agricultural producers retiring or looking for buyers on their farms, he added.

Gathering pace

His comments come after Virginia-headquartered farmland REIT Gladstone Land Corporation purchased an organic almond orchard and expanded its credit facility with MetLife as it aims to do more deals.

Gladstone said it paid $5.9 million for the orchard, which is located in California and is to be operated on a 20-year triple net sale-leaseback agreement that includes both a fixed cash rent and a variable-rent component based on annual gross crop revenue.

The operator was not identified further than being an existing tenant with whom Gladstone has “a strong and established relationship.”

“We are always willing to help our current tenant-partners with their farmland needs,” noted Gladstone Western managing director Bill Reiman.

“By virtue of bringing this additional form of capital in, they provide a further source of soundness to the foundation”
Barry Bogseth, Metlife

The MetLife facility was expanded from $200 million to $275 million, the company said. Gladstone Treasurer Jay Beckhorn labeled the expansion a continuation of the firm’s strong relationship with MetLife, saying the lender had been a partner for Gladstone “every step of the way.”

“Recently, pricing for organic almonds has been at a premium of more than 100 percent over that of conventional pricing, with forecasted demand continuing to outpace supply,” Gladstone chief executive David Gladstone said. “Our hope is that the additional income from this new almond orchard and the added ability to acquire more farms from the facility expansion will allow us to continue to increase the distributions we pay to our shareholders.”