July 9, 2016

Farmland Partners has entered into an agreement to acquire 2,400 acres of land in Florida for approximately $9.4 million.

The deal brings the firm’s land bank to 113,639 acres across 268 farms in Arkansas, Colorado, Florida, Georgia, Illinois, Kansas, Louisiana, Michigan, Mississippi, Nebraska, North Carolina, South Carolina, Texas, and Virginia.

The firm plans to invest a further $6.5 million in the conversion of the land, which is currently being operated as a timber plantation and used as a quail preserve, into a row crop farm to produce forage for a major dairy operation. The process will mainly entail “timber removal and the installation of irrigation equipment,” according to the company.

Upon closing, which is expected to occur in the third quarter of 2016, the company will enter into a ten-year lease including three options for five-year extensions. The conversion and redevelopment period is estimated to happen within the first 18 months of the initial lease. During this time it is estimated that the return on investment will be between 4% and 4.5%. Upon completion of the conversion, the firm expects return on investment to climb to 5.75%, and in years six through ten of the initial lease the rental rate will be adjustable based on shifts in the consumer price index.

“This transaction demonstrates our ability to source and creatively structure deals that help grow our portfolio and achieve attractive rates of return. Moreover, having a successful dairy as a long-term tenant provides security and diversification to our portfolio,” said Paul Pittman, CEO of Farmland Partners in a company statement.

It has been a bush week for ag real estate companies in the state of Florida. Only days ago, Gladstone Land announced it was acquiring 401 vegetable acres in St. Lucie County, Florida for $5.1 million.

Under the terms of the deal, Gladstone will enter into a seven-year lease agreement with a local leading vegetable grower who will run the bell pepper and green bean operation.

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Lynda Kiernan