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Farmland Partners eyes more deals - even after American Farmland purchase

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Farmland Partners forecast no let up in its pace of farm acquisition, even after completing the acquisition of rival American Farmland Company to create a "coast-to-coast" business worth more than $850m.

Paul Pittman, the Farmland Partners chief executive, said that the group would "continue to be acquisitive as we have been", even as it negotiates on the $200m acquisition of American Farmland in an all-share deal.

"It's essentially business as usual," Mr Pittman said, speaking as the US enters its key autumn period for farm deals.

"We will continue to acquire and grow the portfolio of Farmland Partners during the fall. This is obviously the active farm transaction season and so we'll continue to make some acquisitions."

Indeed, the extra scale that the company will gain by buying American Farmland "further enhances Farmland Partners' capabilities to pursue… transactions", using both cash and shares, the group said.

'Truly incredible footprint'

Nonetheless, Mr Pittman added that it was "very unlikely" any deals would be worth as much as that of its latest takeover, which is expected to take at $500m the value of Farmland Partners' acquisitions over 12 months when the transaction closes early in 2017.

Farmland Partners, whose portfolio is centred on row crop land in the Midwest and Mississippi Delta, would gain a "truly incredible footprint" by buying American Farmland, whose land is largely of permanent crops such as almonds and citrus, notably in California and Florida.

"You truly do have a coast-to-coast diverse set of assets at this point in time, with many, many different crop types, 25 crop types or even, in fact, a few more across the country," Mr Pittman said.

Citrus vs cotton

Owning such a spread of assets would boost the stability of Farmland Partners' performance, in making it less vulnerable to, say, the downturns that can hurt margins across row crop and grain farms.

"Corn, soybeans and wheat and rice and cotton even, frankly trade together, so a bad time for a corn farmer is also a bad time for a bean farmer, bad time for a wheat farmer etc.

"There is very little correlation… between almonds and citrus… and the commercial crops like corn and beans.

"So what you put into the portfolio is substantial amount of diversity," besides, with a spread of harvest periods, more regular revenue periods.

"The harvest season on many of these specialty crops is not lined up with the October, November commodity crop cycle, it's at different points during the year."

Share reaction

The comments followed the group's unveiling of its agreed, all-share takeover of American Farmland Company, whose investors will receive 0.7417 shares in Farmland Partners per existing share, giving them a total stake of about 35% of the combined company.

The enlarged Farmland Partners will take revenues of about $42m, and boast a portfolio of 133,000 acres, equivalent to about 54,000 hectares.

Farmland Partners stock stood up 1.0% at $10.52 in midday deals in New York, recovering some of the ground lost in the last session after the deal's announcement.

American Farmland shares were 0.3% higher at $7.19, up 19% since the takeover was unveiled.

By MIke Verdin

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