DENVER, CO – Farmland Partners Inc. (NYSE: FPI), a leading real estate investment trust (REIT) specializing in high-quality farmland, has announced the successful sale of a significant portfolio of its assets. In a definitive agreement finalized on October 2, 2024, Farmland Partners Inc. will transfer 46 farms, encompassing 41,554 acres of prime farmland, to Farmland Reserve, Inc. for a total cash consideration of $289 million. The transaction, a strategic move for Farmland Partners Inc., is anticipated to close on October 16, 2024, pending customary closing conditions.
Portfolio Details and Financial Highlights
The divested portfolio by Farmland Partners Inc. features a geographically diverse collection of farms situated across prominent agricultural states including Arkansas, Florida, Louisiana, Mississippi, Nebraska, Oklahoma, and the Carolinas. Notably, this transaction strategically excludes farmland in Illinois, recognized as some of the most valuable assets within Farmland Partners Inc.’s holdings.
This landmark sale is projected to yield a substantial gain of approximately $50 million for Farmland Partners Inc., representing a 21 percent increase over the aggregate net book value of the sold farms. This achievement builds upon Farmland Partners Inc.’s prior success in 2023, where the company executed asset sales of approximately $200 million, also realizing gains exceeding 20 percent. These consistent high-margin sales underscore the intrinsic value and strategic asset management capabilities of Farmland Partners Inc. in the agricultural real estate sector.
Strategic Rationale and Use of Proceeds
Luca Fabbri, President and CEO of Farmland Partners Inc., emphasized the strategic importance of this transaction, stating, “Farmland is a ‘total return’ investment, with asset appreciation typically driving the majority of returns.” He further elaborated on the company’s long-held belief that the market has not fully recognized the appreciation within Farmland Partners Inc.’s asset base. “This sale, mirroring our achievements last year, serves as a powerful validation of our total return investment thesis and highlights the inherent, yet unrealized, value within our stock,” Fabbri commented.
The substantial capital infusion from this sale will be strategically deployed to strengthen Farmland Partners Inc.’s financial position and enhance shareholder value. Approximately $140 million is earmarked for debt reduction, significantly improving the company’s balance sheet. The remaining capital will be allocated to strategic initiatives including stock buybacks, potential acquisitions to further expand and optimize their portfolio, and for general corporate purposes. Furthermore, mirroring the previous year’s success, Farmland Partners Inc. anticipates being in a position to declare a significant special distribution to its shareholders at the year-end, rewarding their continued investment and confidence in Farmland Partners Inc.
Partnership with Farmland Reserve, Inc.
Mr. Fabbri also expressed enthusiasm about the collaboration with Farmland Reserve, Inc., recognizing their esteemed reputation within the agricultural community. “We are delighted to entrust our long-standing tenant relationships to Farmland Reserve, a highly respected institutional investor who shares our values regarding tenant partnerships,” Fabbri stated. He highlighted Farmland Reserve’s reputation as a “best-in-class owner” known for its expert farm management and ethical dealings with farmer tenants, expressing confidence that the tenants will benefit from this transition and find an “excellent partner moving forward.”
Doug Rose, CEO of Farmland Reserve, echoed this sentiment, stating, “We are grateful for the opportunity to collaborate with Farmland Partners to acquire this exceptional portfolio of high-quality farmland.” He further added, “We appreciate Farmland Partners’ confidence in selecting us as the appropriate buyer for these properties and the valuable farmer tenant relationships associated with them. As a long-term investor, Farmland Reserve is committed to leasing these productive farms to local farmers for many years to come,” highlighting their commitment to the farming community and the sustainability of agricultural operations.
About Farmland Partners Inc.
Farmland Partners Inc. (NYSE: FPI) is an internally managed REIT that owns and actively seeks to acquire high-quality farmland across North America. In addition to farmland ownership, Farmland Partners Inc. extends loans to farmers, secured by farm real estate, further supporting the agricultural sector. Post-transaction, Farmland Partners Inc. is projected to own and manage an impressive portfolio of over 140,000 acres of farmland spanning 15 states. These states include Arkansas, California, Colorado, Illinois, Indiana, Iowa, Kansas, Louisiana, Michigan, Mississippi, Missouri, Nebraska, North Carolina, South Carolina, and Texas, demonstrating a wide geographical footprint in key agricultural regions. Moreover, Farmland Partners Inc.’s portfolio includes land and buildings housing four agricultural equipment dealerships in Ohio, leased to Ag Pro and operating under the John Deere brand, showcasing diversification within the agricultural value chain. Farmland Partners Inc. elected to be taxed as a REIT for U.S. federal income tax purposes, commencing in 2014, underscoring its commitment to delivering value to shareholders through real estate investments. For further details, please visit www.farmlandpartners.com or contact (720) 452-3100.
About Farmland Reserve, Inc.
Farmland Reserve, https://farmlandreserve.org, operates as an integrated investment auxiliary of The Church of Jesus Christ of Latter-day Saints. Farmland Reserve’s financial activities are dedicated to supporting the Church’s broader mission, encompassing religious, humanitarian, educational, and charitable endeavors, highlighting its socially responsible investment approach.
Forward-Looking Statements
Please note: The forward-looking statements section and contact information from the original press release are intentionally omitted to adhere to the user’s request for only title and content.
