Farmland Partners Announces Major Sale of Farm Portfolio
Farmland Partners Engages in Significant Portfolio Sale
Farmland Partners Inc. (NYSE: FPI) has made headlines with its decision to sell a substantial portfolio encompassing 46 farms. This portfolio, which totals approximately 41,554 acres of productive farmland, is set to be sold for $289 million to Farmland Reserve, Inc. This all-cash transaction has been settled, paving the way for a closing date, once all conditions are met.
Insights into the Farm Portfolio
The extensive portfolio includes agricultural holdings spread across various regions. Notably, this transaction excludes any farmland located in Illinois, widely regarded as some of the most valuable agricultural land. Following this sale, Farmland Partners anticipates a gain of around $50 million, translating to roughly 21 percent over the net book value of the sold farms. Additionally, the company has demonstrated strong performance by selling approximately $200 million of assets last year at a comparable gain.
CEO's Perspective on the Sale
Luca Fabbri, President and CEO of Farmland Partners, expressed enthusiasm regarding the sale. He noted, "Farmland is a total return investment, where asset appreciation often constitutes the majority of the overall investment return. We have consistently advised shareholders that our assets are undervalued within the marketplace. This sale serves to reaffirm our investment thesis and underline the intrinsic value reflected in our stock. With the capital generated, we aim to reduce debt by roughly $140 million and pursue various strategies, including stock buybacks and acquisitions."
Transitioning Relationships with Farmers
Fabbri also highlighted the importance of maintaining relationships with existing tenants while transitioning to Farmland Reserve. He remarked, “We’re pleased to connect our long-term tenants with a respected institutional buyer that values relationships similarly to how we do.” This commitment to fostering positive tenant relations emphasizes the collaborative nature of the farmland investment community.
About Farmland Partners Inc.
Farmland Partners is an internally managed real estate firm focused on acquiring high-quality North American farmland. Upon the completion of this sale, the company will have ownership and management over more than 140,000 acres across 15 states. This portfolio includes a diverse mix of states, showcasing Farmland Partners' presence and strategy within the agriculture sector. Additionally, they own buildings and land for four agriculture equipment dealerships in Ohio, which are leased to Ag Pro.
Farmland Reserve's Acquisition Goals
Doug Rose, CEO of Farmland Reserve, shared his excitement regarding the acquisition of this significant portfolio. He stated, "We are thankful for the chance to collaborate with Farmland Partners on this acquisition. The quality of this farmland is exceptional, and we look forward to continuing leasing these farms to local farmers.” Farmland Reserve aims to ensure these resources are utilized effectively over the long term, reinforcing their commitment to agricultural sustainability.
Frequently Asked Questions
What is the significance of the sale by Farmland Partners?
This sale represents a strategic maneuver to both realize gains from their existing assets and improve the company’s financial position.
Who is the buyer of the farmland portfolio?
The buyer of the portfolio is Farmland Reserve, Inc., an organization recognized for its ethical management practices in the farmland sector.
What will Farmland Partners do with the proceeds from the sale?
The proceeds from the sale will be used to reduce debt, buy back stock, pursue acquisitions, and possibly provide special distributions to shareholders.
How does this transaction align with Farmland Partners’ future strategy?
This transaction allows Farmland Partners to enhance its asset portfolio while demonstrating their value to shareholders, focusing on growth and sustainability.
What is the outlook for Farmland Partners following the sale?
With over 140,000 acres still under management, Farmland Partners expects solid performance while maintaining a commitment to sustainable agricultural practices and tenant relationships.
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