MCLEAN, VA - Gladstone Land Corporation (NASDAQ: LAND) is a public company that owns 34 farms, comprised of 8,787 acres in 5 different states across the U.S., valued at approximately $213 million. Now anyone can own farmland by buying stock in the public company.
What is Gladstone Land Corporation?
The real estate investment trust has been buying up farmland across the nation, and it’s not in any hurry to be worth billions of dollars. As David Gladstone, CEO, tells me, the goal is to simply own the land and lease it out.
"We would like to work with farmers that want us to buy farms for them to lease on long term leases," said Gladstone. "Many farmers are worried that if they do not own the land they will not be able to farm it. But we want the same farmer to lease our land for very long periods. Most businesses do not tie up their equity to own their real estate but rather use their equity to build their operations."
“It’s a simple business model,” Gladstone continued. “I’m a very methodical lender and investor. We just want to buy a good farm, lease it to someone and hope it sits there forever and a day with the same farmer farming it. Our goal is to continue to buy land and put good tenants in place on the same farm for the next 20 years. I like the idea of being worth billions of dollars, but we’re not trying to do it overnight.”
How did Gladstone get started?
Gladstone’s deliberate approach to investing in land has led many to wonder: What is Gladstone Land Corporation? Just over a decade ago, David Gladstone, who formerly ran Coastal Berry Co. in Watsonville, CA, leased approximately 5,000-6,000 acres at the time and thought he’d be better as more of an investor than an operator. In 2004, he sold the operations of growing and selling to Dole, which became his only tenant at the time. After raising additional equity and better lines of credit, Gladstone started to build the company up. Gladstone has other funds such as Gladstone Investment (NASDAQ: GAIN) and likes the agriculture area. Gladstone recently bought a company called Jack Rabbit, a nut harvesting equipment maker in California.
“That original shot of land that was leased by Dole was the first thing that sparked our interest going forward,” said Gladstone.
Expansion
Gladstone currently owns land throughout California, Arizona, Florida, Oregon, and Michigan. Most recently, the company purchased a $3.2 million organic farm in Florida and is moving up the east coast as far as New Jersey.
Gladstone tells me that the company is just now venturing into the Midwest after having opened an office just outside of St. Louis. William “Bill” Hughes has been welcomed to the Gladstone team to seek out potential acquisitions of farms in the Midwest. He will be looking for farms that grow fresh produce like sweet corn, green beans, melons, potatoes, cabbage, and more.
“We are beginning to look at tree and vine crops and trying to understand how they trade and where they go and try to find the best operators,” said Gladstone. “We’re only trying to work with the top 20% or 30% of farmers who represent the best and brightest in the growing area.”
Gladstone’s business model is highly dependent on being able to borrow money at lower than it’s being leased so that Gladstone’s shareholders get the difference between what they get in from the farmer’s rent and what the company has to pay the lending institution in interest for helping them buy the land.
“So far [our model] has worked very well,” said Gladstone. “We have plenty of firepower to go forward at our will.” Gladstone mentioned that they can buy farms for stock in a tax free exchange for those who want to keep the income coming in and not have to pay taxes on the capital gains from selling the farm. The company pays a dividend of four cents per share per month and recently increased the dividend by 33%.
Considering how much land the company has acquired within the past year, I don’t doubt Gladstone’s confidence. Stay tuned as we continue to follow this company's plans for the future.
