Gladstone Land Corporation (GLC) has acquired three farms for $19 million comprised of approximately 850 gross acres of irrigated farmland in Kern County, Calif.
Currently, most of the acreage is planted in wine grapes.
GLC will finance the new tenant-farmer’s development of the property into an almond orchard at an expected total cost of approximately $8 million, according to a company news release.
According to GLC, the Company entered into a lease agreement with an industry leader in almonds, tomatoes, and frozen vegetables for a 15-year, triple-net lease. It will provide a fixed return for the first four years, and then convert to a revenue-sharing rent structure that includes a rental floor.
Subject to yield and crop prices, projected annual rents under this lease are expected to exceed 8 percent of the total costs invested.
“Today’s announcement marks our most significant foray into permanent crops to date, specifically almonds,” said Bill Reiman, managing director of GLC’s western division.
“We expect the entire property will be planted with almonds soon.”
GLC says the property is in a location with proven high-yield almond production and excellent groundwater resources.
Reiman added, “This acquisition adds to our presence in southeastern Kern County, which like most of our properties’ regions, is an area of high-value agriculture. And we are partnering with one of the most successful almond growers in California.”
GLC President and Chief Executive Office David Gladstone says the acquisition allows the company to further diversify its business.
“Diversification is extremely valuable in the farming industry in order to protect our asset base and our income to pay distributions,” Gladstone said.
GLC is a real estate investment trust that pays monthly distributions to its stockholders. The company invests in farm land located in major agricultural markets in the U.S. and in turn leases it to corporate and independent farmers.
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