MCLEAN, VA – Gladstone Land Corporation has acquired three farms made up of 850 acres of irrigated farmland in Kern County, California, for $19 million. This equates to approximately $22,352 per acre of farmland.
Though wine grapes make up a majority of the property’s crop, Gladstone will finance the new tenant-farmer’s development of the property into an almond orchard at an expected cost of $8 million. An “industry leader in almonds, tomatoes, and frozen vegetables” has entered into a 15-year, triple-net lease that provides for a fixed return for the first four years, thereafter converting to a revenue-sharing rent structure that includes a rental floor, according to a press release.
“For the first time, we are also entering into a revenue-sharing arrangement that will go into effect in four years,” said David Gladstone, CEO. “The minimum base rent during the revenue-sharing period is still sufficient so as to not impair our ability to meet future distributions, and we believe the revenue-sharing component will add to our future profits, allowing us to increase our distributions.”
Metropolitan Life Insurance Company, or MetLife, helped to fund this acquisition. This move marks another large step into permanent crops for the real estate investment trust.
“We expect the entire property will be planted with almonds soon,” said Bill Reiman, Managing Director of Gladstone’s western division. “This property is in a location of proven high-yield almond production and excellent groundwater resources. This acquisition adds to our presence in southeastern Kern County, which, like most of our properties’ regions, is an area of high-value agriculture.”
Gladstone is also refinancing its existing credit facility with MetLife. Under the modified facility, the blended interest rate on all previously-disbursed amounts under the long-term note payable was reduced by 26 bps, and the fixed rate term of the note was extended by 44 months. In addition, the spread on the revolving line of credit under the facility was reduced by 25 bps. Gladstone added that this agreement should provide the company with significant savings over the next several years, which he hopes will be passed on to the company’s shareholders.
Gladstone Land currently owns 41 farms, comprised of 14,876 acres in six different states across the U.S., valued at approximately $261 million. These states include Arizona, California, Florida, Oregon, Michigan, and Nebraska.
The company recently made its way into Nebraska this past August with the acquisition of 2,559 acres of farmland in the state.
For more on Gladstone Land, where it’s headed, and David Gladstone’s approach to acquiring farmland, check out our interview by clicking here.
