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US farmland group rebuild warchests ahead of 2018

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The top two US listed farmland investment groups, Farmland Partners and Gladstone Land, within minutes of eachother unveiled moves to beef up their warchests to support fresh prospective acquisitions in 2018.

 

Farmland Partners, which this year raised its portfolio by some 35,000 acres to 160,000 acres, unveiled a deal with Rabo AgriFinance for loan financing of up to $80.0m, of which it has taken $66.4m, on interest of 1.70% above the benchmark Libor rate.

 

“We are pleased… to have developed a new relationship with one of the nation’s largest agricultural lenders,” said Paul Pittman, the chief executive of Farmland Partners, which has previously relied for debt financing on the likes of Metropolitan Life Insurance, better known as MetLife, and Federal Agricultural Mortgage Corp, better known as Farmer Mac.

 

The Rabo loan will add to the $144.2m that Farmland Partners raised in August through an issue of preferred shares, with the funds expected to support “future farmland acquisitions”.

 

Mr Pittman said that between the Rabo funding and the preferred share issue, “we have meaningfully expanded and diversified the company’s sources of capital”.

 

‘Additional acquisitions’

 

Separately, Gladstone Land revealed an expansion of $75m, to $275m, in a credit facility with MetLife, saying that the funding “should allow us to continue to acquire additional farms and increase the overall diversity of our farmland holdings”.

 

Indeed, the announcement came as the group, which has expanded its portfolio by some 13,000 acres to 63,000 acres this year, revealed the $5.9m purchase of an organic almond orchard in California.

 

The land, like other Gladstone Land and Farmland Partners holdings, is being leased out rather than farmed directly, with the groups aiming to benefit from rental income besides long-term land price appreciation.

 

In the case of the latest acquisition, Gladstone Land’s rental income will be tied in part to crop revenues, on top of a fixed-rate sum.

 

Lure of nuts

 

“Recently, pricing for organic almonds has been at a premium of more than 100% over that of conventional pricing, with forecasted demand continuing to outpace supply,” said David Gladstone, the Gladstone Land chief executive.

 

The company said that with the acquired farm 100% organic, and “currently in peak production”, it should achieve “excellent returns for us in the coming years”.

 

Mr Gladstone added: “Our hope is that the additional income from this new almond orchard, and the added ability to acquire more farms from the [MetLife] facility expansion, will allow us to continue to increase the distributions we pay to our shareholders.”

 

Farmland Partners’ latest acquisition, closed last month, was also in California, comprising 5,100 acres of almond, pistachio and walnut land purchased for $110m from Olam International, which will continue to farm the land in return for rental payments also including a revenue share clause.

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