Gladstone Land, whose properties already produce everything from blueberries to mint for chewing gum, found a new market to expand into – water – in a deal which took its portfolio nearly to 80,000 acres.
The group - which buys farmland for renting to producers, with the aim of tapping into both rental income and growth in capital values – said that it had paid $58.0m for 3,586 acres of farmland and facilities in southern Florida.
The deal, one of Gladstone’s biggest yet, extended its portfolio to 79,796 acres, which it values at about $733m.
While the average of more than $9,000 per acre for the group’s land is well above typical US prices, the group’s investments are centred on specialist crops, such as vegetables, fruits and nuts, which attract higher farm values.
However, unlike Gladstone’s previous investments, its latest purchase, Caulkins Water Farm, centres on managing water rather than crops.
Gladstone said that the property “has a history of vegetable and citrus farming”, in line with the regional norm.
However, it is “currently used for diversified agricultural purposes, with the primary use being water retention”.
“The majority of the property is currently utilised to retain and prevent water flowing from Lake Okeechobee to the coastal communities, which can have a negative environmental impact,” said Bill Frisbie, the Gladstone managing director.
The farm acts as something of a flood plain to prevent water surges from Lake Okeechobee damaging areas further downstream, to the St Lucie Estuary.
‘Potential to be converted’
Caulkins Citrus, the seller of the farm, will retain management under an eight-year leasing deal with Gladstone, which said that it would maintain the property in its current use.
“Our objective is to keep using it in its current purpose for as long as the State of Florida desires,” Mr Frisbie said.
However, he also noted that the property, next to a farm that Gladstone Land already owns, “has the potential to be converted into prime organic farm acreage in the future.
“We are very pleased to acquire another property in a prime vegetable-growing region in south Florida.”
An eventual reversion of the land to vegetable production would certainly be in line with Gladstone’s more typical investment.
(Its previous purchase, for instance, two weeks ago was a $9.0m acquisition of 324 acres of vegetable and strawberry land in California.)
But is the group overlooking the value to be obtained from managing water itself?
Certainly, that is where Caulkins Citrus sees potential for gains.
“We plan to use the capital from this transaction to explore additional land investments in the state to retain and treat water and help eliminate discharges,” said George Caulkins, the Caulkins Citrus managing partner.