September 6, 2017

Real Estate Investment Trust (REIT) Gladstone Land announced it has acquired White Hawk Vineyard – a 361-acre wine grape vineyard located in Santa Barbara County, California, for $5.4 million.

As is fitting with Gladstone’s business model, upon closing, the firm entered into a 10-year, triple-net lease with a leading vineyard and orchard operator to run the property which currently consists of 75 planted vineyard acres. However, moving forward, Gladstone plans to engage the current tenant, who is experienced in vineyard development, to develop a further 190 acres at the site into productive vineyard acreage. Gladstone will fund the project and according to the agreement, will earn additional rental income on the project as the capital is disbursed.

“The tenant is an operator we know well, as they also lease another farm from us, and we are proud to be a part of the growth of their business,” noted Bill Reiman, managing director of Gladstone Land, in a company statement.

A Year of Firsts

“We believe that 2017 will be the best year in our company’s history,” said Gladstone in January, and so far, the company has had a dynamic showing.

Gladstone Land has experienced an impressive year of “firsts”. This deal for White Hawk expands the firm into not only a new crop, but also represents its first investment in Santa Barbara County.

“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 David Gladstone, president and CEO of Gladstone Land.  “We believe the addition of excellent farms in high-demand regions like Santa Barbara will enable the income earned on our farms and the appreciation of our farmlands’ values to grow steadily, allowing us to achieve our goal of continuing to increase distributions we pay to our stockholders.”

Other firsts for Gladstone over the past year include the company’s expansion into high-fiber hay production for the first time in August 2016, when it acquired 7,284 acres in Southeast Colorado – also a new geography for the company.

“Our potential tenant has farmed in Southeast Colorado for decades with an operation that specializes in providing a high-fiber, low-protein hay blend for the cattle feed-lot industry,” said Bill Hughes, Gladstone Land’s midwest marketing director at the time.  

Building upon this deal, Gladstone acquired an additional 16.595 contiguous acres in the production of high-fiber hay for a total consideration of $12.1 million in January of this year.

Another benchmark was achieved in January of this year, when Gladstone made its largest land deal in the company’s history – acquiring 3,750 acres of organic farmland in southern Florida for $54 million. The company had secured a 7-year lease with a leading regional vegetable grower and marketer that included clauses for annual rent escalations and options for three, five-year extensions.

Following in June of this year, the company expanded into a new region of Arizona through its acquisition of four farms in the southwest region of the state totaling 3,253 gross acres with 3,032 irrigated, of which a portion is certified organic for $27.5 million.

Geographically, the expansion is a smart strategic addition to Gladstone’s portfolio. Southwestern Arizona is a key winter production region for fresh produce and one of the top production regions for early summer melons.

“This is our second large acquisition of 2017, and we are excited to enter into a new growing region,” said David Gladstone, president and CEO of Gladstone Land at the time. “These farms have a total of 19 wells onsite, giving them access to plenty of water, and this transaction allowed us to partner with yet another top grower.”

Gladstone’s portfolio expanded into another new region in June of this year when the company announced it had acquired two contiguous organic farms totaling 310 acres in North Carolina for $2.2 million.

“We are extremely pleased to make our first acquisition in the Carolinas, one of the premier growing regions in the eastern U.S. for fruits and vegetables,” said Bill Frisbie, the company’s managing director for the Eastern U.S., upon the announcement.  “We hope to partner with many of the other great farmers in the Carolinas to acquire more farms growing blueberries, sweet potatoes, and many other crop types.”

A Growing Portfolio

The acquisition of White Hawk brings Gladstone’s farmland portfolio to a total 71 farms encompassing 61,048 acres across eight U.S. states with a value of $522 million.

The portfolio is concentrated more toward locations where tenants are able to grow fresh produce annual crops like berries and vegetables, and permanent crops including almonds, blueberries, and pistachios.

The company has also made a concerted effort to increase its organic farmland holdings in recent months, and reserves the option to expand its investments into properties related to farming such as cooling facilities, processing and packaging sites, or distribution centers. As of the company’s latest quarterly report released June 30, the estimated net asset value was $14.46 per share.

-Lynda Kiernan