Corporate Sale of Farms Detailed

OMAHA (DTN) -- The real estate arm of the Mormon Church is growing larger this month after another company announced a deal to sell it 46 farms totaling 41,554 acres for $289 million in an all-cash deal.

Denver-based publicly traded real estate investment trust Farmland Partners Inc. is selling the 46 farms across eight states to Utah-based Farmland Reserve Inc., a real-estate investment company operated by the Church of Jesus Christ of Latter-day Saints.

Collectively, the sale of the 46 farms averaged $6,955 an acre. The farms are located across Arkansas, Florida, Louisiana, Mississippi, Nebraska, Oklahoma and the Carolinas. The deal announced last week is set to close on Oct. 16.

In a news release, Farmland Partners noted the sale did not include any of the company's Illinois farm ground "which is among the most valuable land that it owns."

Farmland Partners, according to its investor presentation on its website, owns 145,000 acres in the U.S. and manages another 45,000 acres across 15 states. Its total real estate portfolio tops $1 billion in value. Farmland Partners has acquired more than 300 farms since its IPO in 2014.

Farmland Partners cites roughly 90% of its acres grow row crops across Arkansas, Colorado, Florida, Illinois, Indiana, Kansas, Louisiana, Mississippi, Missouri, North Carolina, Nebraska, Oklahoma, South Carolina and Texas. The company also has orchards in California. Farmland Partners also has more than 100 tenant farmers.

Farmand Partners noted its total gain on sale will be approximately $50 million, or approximately 21% over the aggregate net book value of the farms.

"Farmland is a 'total return' investment, with asset appreciation typically accounting for a majority of the overall return on invested capital," said Luca Fabbri, Farmland Partner's president and CEO. "We have consistently advised shareholders that our company is undervalued due to lack of recognition by the market of the appreciation in our asset base. As we did last year, we have once again proven our total return thesis and highlighted the unrealized intrinsic value in our stock by delivering a sizable gain on a representative segment of our overall portfolio. We intend to deploy the resulting capital to reduce debt by approximately $140 million, to buy back stock, to pursue acquisitions, and for other corporate purposes. Moreover, as we did last year, we expect to be in a position to make a significant special distribution to shareholders at year-end."

Fabbri added Farmland Partners was excited to work with Farmland Reserve on the sale.

"We are pleased to transition our long-standing tenant relationships to a high-quality institutional investor that values relationships as we do," he said. "Farmland Reserve is highly respected in the farmland community as a best-in-class owner that manages farms expertly and deals honestly and ethically with its farmer tenants. We strongly believe that our farmer tenants will have an excellent partner moving forward."

"We are grateful for the opportunity to work with Farmland Partners to acquire this unique portfolio of high-quality farmland," said Doug Rose, CEO of Farmland Reserve. "We're also gratified they saw us as the right buyer for these properties and the farmer tenant relationships that come with them. As an investor with a long-term vision, we look forward to leasing these productive farms to local farmers for many years to come."

Farmland Reserve doesn't list how much land the company owns and does not have a contact on its website. The company reportedly owns more than 1 million acres of farmland nationally, including 370,000 acres in Nebraska as well as large holdings in Florida.

Last year, Sen. Cory Booker, D-N.J., a member of the Senate Agriculture Committee, introduced the "Farmland for Farmers Act," a bill that would restrict corporate ownership of farmland by cutting off access to USDA and Farm Credit programs. The bill was backed by a collection of family farm groups. Booker said at the time that the value of institutionally owned farmland had grown from $2 billion in 2009 to $14 billion in 2022. Booker's bill has one cosponsor, Sen. Bernie Sanders, I-Vt., and it has not received any hearing or discussion about inclusion in the farm bill.

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on social platform X @ChrisClaytonDTN

(c) Copyright 2024 DTN, LLC. All rights reserved.