Real Estate Investment Trust (REIT) Gladstone Land announced the sale of a one of its Oregon-based farming assets for $20.5 million.
A company statement disclosed that the farm in question is a 1,895-acre operation in Morrow County, and according to the firm’s website, this would be a vegetable farm growing onions and potatoes in the town of Boardman. The property is part of the Potlatch Water Delivery System that draws water from the Columbia River and has a Certificate of Water Rights issued by the Oregon Water Resource Department.
Although the company’s strategy is to hold portfolio assets for the long-term, the tenant currently managing the property made Gladstone an offer for the farm that drew the company’s attention.
“Our sale in Oregon was driven by a very compelling purchase offer from our current tenant,” said Bill Frisbie, managing director of Gladstone Land. “Our strategy is to buy and hold for the long term, but occasionally we receive an offer that warrants serious consideration.”
The offer of $20.5 million reflects a premium of 22 percent above the farm’s most recent valuation, and resulted in a 22 cent increase to Gladstone’s estimated net asset value per common share; a 20 percent internal rate of return on its initial equity investment; and a gain of $6.4 million on the sale.
We believe the sale of the Oregon farm validates our investment thesis of acquiring high-value farmland that appreciates over time,” said David Gladstone, president and CEO of Gladstone Land.
This sale however, is not an indication that Gladstone will be stepping away from acquisitions.
We look forward to continuing to build on our existing tenant-farmer partnerships during 2018,” said Gladstone. “Our current acquisition backlog remains healthy, and we hope to be able to acquire several additional farms that grow a variety of crop types throughout the rest of the year.”
A String of Deals
Over the past year, Gladstone has strengthened its portfolio by completing a string of permanent farmland deals.
In July of last year the company announced its acquisition of four contiguous farms located in Fresno, California, for approximately $13.6 million.
The four properties, which brought Gladstone into a new geography for the company, encompass a total 847 acres, of which 327 acres are planted in pistachio trees, and another 318 acres are planted in almond trees. All plantings were completed between 2002 and 2009.
“This is our second large acquisition of 2017, and we are excited to enter into a new growing region,” Gladstone said at the time.
Two months later, in September of last year, Gladstone acquired White Hawk Vineyard – a 361-acre wine grape vineyard located in Santa Barbara County, California, for $5.4 million.
“We have targeted this area for a number of years in order to continue to diversify our farmland holdings both geographically and by crop type,” said Gladstone at the time.
That same month, amidst an undeniable acquisitive streak, Gladstone announced the acquisition of a 746-acre organic permanent crop farm in Walla Walla, Washington, for $9.5 million. The addition of this property, which produces apples, wine grapes, and cherries, represents the first permanent crop holding for the company in Washington State.
In December 2017, Gladstone announced the acquisition of a California organic almond orchard for $5.9 million. At the same time, the company announced that it has successfully expanded its current credit facility arranged with Metropolitan Life Insurance Company from $200 million to $275 million.
Most recently, in March of this year the company acquired a 176-acre blueberry farm in Van Buren County, Michigan, for a total consideration of $2.1 million.
Where We Stand
With its exit from the Morrow County property, Gladstone now holds a portfolio of 74 farms totaling 61,430 acres, valued at $521 million, across nine U.S. states. The majority of these farms are in locations suitable for the production of specialty annual row crops such as vegetables and berries, and permanent crops such as almonds, blueberries, and pistachios. Since its public offering in January 2013, the company has paid 65 consecutive months cash distributions on its common stock, with the current per-share monthly distribution standing at $0.04435, or $0.5322 per year.
-Lynda Kiernan
The post Investment Thesis Proves Out: Gladstone Announces Significant Gain on Farm Sale appeared first on Global AgInvesting.