Farmland Partners Inc. (NYSE: FPI), a real estate investment trust (REIT) specializing in high-quality farmland, has announced a significant portfolio sale that underscores the intrinsic value of its assets and presents a compelling narrative for investors considering Farmland Partners Inc Stock. The company revealed the $289 million all-cash transaction involving 46 farms spanning 41,554 acres to Farmland Reserve, Inc., a deal expected to finalize on October 16, 2024, pending standard closing conditions.
This strategic move involves a diverse range of farmland across states like Arkansas, Florida, Louisiana, Mississippi, Nebraska, Oklahoma, and the Carolinas. Notably, the sale excludes Farmland Partners’ Illinois properties, recognized as some of their most valuable holdings. The transaction is projected to yield a substantial $50 million gain for FPI, marking a 21 percent increase over the net book value of the sold farms. This echoes the company’s successful asset sales in 2023, where approximately $200 million in assets were divested with gains exceeding 20 percent.
Luca Fabbri, President and CEO of FPI, emphasized the significance of this sale in validating the company’s investment thesis. “Farmland is a ‘total return’ investment,” Fabbri stated, “with asset appreciation being a primary driver of overall returns.” He further elaborated that the market has yet to fully recognize the appreciated value of FPI’s asset base, leading to an undervaluation of farmland partners inc stock. This sale serves as tangible proof, demonstrating the inherent and unrealized value within their portfolio, similar to gains realized in the previous year.
The proceeds from this substantial sale are earmarked for strategic financial maneuvers. Farmland Partners intends to allocate approximately $140 million to debt reduction, strengthening its balance sheet. Furthermore, the company plans to reinvest in itself through stock buybacks, potentially enhancing shareholder value. Acquisitions and general corporate purposes are also on the horizon, signaling proactive management and a focus on growth. Building on the precedent set last year, Fabbri also indicated the strong possibility of a significant special distribution to shareholders at the end of the year, further incentivizing investment in farmland partners inc stock.
Fabbri expressed enthusiasm about partnering with Farmland Reserve, highlighting the smooth transition for existing tenants. “We are pleased to transition our long-standing tenant relationships to a high-quality institutional investor that values relationships as we do,” he commented. He lauded Farmland Reserve’s reputation within the agricultural community as a respected owner known for expert farm management and ethical dealings with farmer tenants, assuring a positive future for the farmers involved.
Doug Rose, CEO of Farmland Reserve, reciprocated the positive sentiment, stating, “We are grateful for the opportunity to work with Farmland Partners to acquire this unique portfolio of high-quality farmland.” He acknowledged Farmland Partners’ trust in selecting them as the appropriate buyer, recognizing the value of both the properties and the tenant relationships. Farmland Reserve, with its long-term investment perspective, looks forward to maintaining leases with local farmers for years to come, ensuring the continued productivity of these farms.
About Farmland Partners Inc.
Farmland Partners Inc. operates as an internally managed REIT, focused on acquiring and managing high-quality North American farmland and providing loans to farmers secured by farm real estate. Post-transaction, the company’s portfolio is expected to encompass over 140,000 acres across 15 states. Beyond farmland, FPI also owns properties leased to agricultural equipment dealerships. Farmland Partners has operated as a REIT since 2014, offering investors exposure to the agricultural real estate market. For further details, investors can visit www.farmlandpartners.com or contact (720) 452-3100.
About Farmland Reserve, Inc.
Farmland Reserve, accessible at https://farmlandreserve.org, is an investment arm of The Church of Jesus Christ of Latter-day Saints. Its investment activities support the Church’s broader mission, encompassing religious, humanitarian, educational, and charitable endeavors.
Forward-Looking Statements
This announcement includes forward-looking statements regarding future expectations and plans. While based on reasonable assumptions, these statements are subject to risks and uncertainties that could cause actual results to differ. Factors influencing these statements include the completion of the portfolio sale, the deployment of proceeds, market conditions affecting stock buybacks and dividends, geopolitical events, economic factors like inflation and recession, weather events, and regulatory changes. Investors in farmland partners inc stock should review FPI’s filings with the Securities and Exchange Commission, including the 2023 Form 10-K, for a comprehensive understanding of potential risks. The company does not commit to updating forward-looking statements.
Contacts
Phillip Hayes [email protected]
