Key Takeaways:
- Farmland Partners Inc. (FPI) sells 46 farms, totaling 41,554 acres, for $289 million in an all-cash transaction with Farmland Reserve, Inc.
- The transaction is set to close on October 16, 2024, once all conditions are met.
- FPI’s total gain on sale is approximately $50 million, representing a 21% gain over the net book value of the farms.
- FPI intends to use the proceeds to reduce debt, buy back stock, pursue acquisitions, and other corporate purposes.
- The sale excludes FPI’s farmland holdings in Illinois.
Farmland Partners Inc. (NYSE: FPI) announced today the sale of a portfolio consisting of 46 farms, covering a total of 41,554 acres, for $289 million in an all-cash transaction with Farmland Reserve, Inc. The transaction, which includes farms in Arkansas, Florida, Louisiana, Mississippi, Nebraska, Oklahoma, and the Carolinas, is scheduled to close on October 16, 2024, pending satisfaction of closing conditions.
Significant Financial Gain and Portfolio Strategy
The sale will yield FPI a gain of approximately $50 million, or 21% over the aggregate net book value of the farms in the portfolio. In 2023, FPI similarly sold approximately $200 million worth of assets, with gains exceeding 20%. The current transaction does not include any of the company’s Illinois farmland, which remains among the most valuable assets in its portfolio.
Commenting on the sale, Luca Fabbri, FPI’s President and CEO, emphasized the company’s ongoing commitment to maximizing the value of its assets. “Farmland is a ‘total return’ investment, with asset appreciation typically accounting for a majority of the overall return on invested capital. 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.”
Fabbri noted that FPI will use the capital from the transaction to reduce debt by approximately $140 million, buy back stock, pursue acquisitions, and other corporate purposes. The company also anticipates a significant special distribution to shareholders at year-end, similar to its actions following asset sales in 2023.
Partnership with Farmland Reserve
FPI expressed confidence in working with Farmland Reserve, Inc., a highly regarded institutional investor in the agricultural community. Fabbri stated, “We are pleased to transition our long-standing tenant relationships to a high-quality institutional investor that values relationships as we do. Farmland Reserve is highly respected for its expertise in farm management and ethical dealings with its tenants.”
Doug Rose, CEO of Farmland Reserve, echoed these sentiments, saying, “We are grateful for the opportunity to work with Farmland Partners to acquire this unique portfolio of high-quality farmland. We look forward to leasing these productive farms to local farmers for many years to come.”
Farmland Partners’ Latest News
Reports Financial Performance for FY 2023 (2024/07/25)
Farmland Partners Inc. reported a net loss of $2.1 million in Q2 2024, compared to a net income of $7.9 million in 2023. Adjusted Funds from Operations (AFFO) improved significantly to $0.5 million, reflecting the company’s efforts to streamline operations and reduce costs. Operating revenues were $11.4 million, slightly down from the previous year’s $11.6 million. Cost-saving initiatives resulted in a 7% reduction in operating expenses, positioning FPI for a leaner cost structure. FPI’s average gross book value of real estate decreased by 10.4% from the same period last year, but its Net Operating Income increased by 7.8% to $8.8 million. The company’s CEO,Luca Fabbri, expressed optimism for continued strong performance and a leaner corporate structure.
Read more here.
Reports Financial Performance for FY 2023 (2024/02/29)
Farmland Partners Inc. (FPI) reported robust financial results for the fiscal year ending December 31, 2023. The company’s net income soared to $31.7 million, reflecting effective asset management and favorable market conditions. FPI actively managed its property portfolio through strategic dispositions and acquisitions, with notable gains from property sales and a decrease in total debt. FPI also declared a one-time special dividend of $0.21 per share, demonstrating its commitment to shareholder value. CEO Luca Fabbri expressed confidence in the farmland sector’s potential and outlined strategies for long-term value creation.
Changes In the Board of Directors (2024/01/02)
Murray Wise, the founder of Murray Wise Associates LLC (MWA), a subsidiary of Farmland Partners Inc. (NYSE: FPI), will retire from the Company’s Board of Directors on January 1, 2024. FPI’s Executive Chairman, Paul Pittman, praised Wise’s visionary approach and dedication to the farmland market, and extended heartfelt wishes for his retirement. Wise’s career spanned over four decades, during which he founded the world’s largest institutional farmland asset manager, the Westchester Group, before founding MWA.
Farmland Partners Inc. Reports Q3 2023 Results: Focus on Agriculture-Related Segment (2023/10/26)
Farmland Partners Inc. reported a net income of $4.3 million for Q3 2023, up from $1.1 million in Q3 2022. During the quarter, the company completed 35 farm dispositions and one farm acquisition. Lease renewals came with rent increases ranging from 18% to 20%. The company plans to sell up to $65 million of additional farmland and has two acquisition transactions under negotiations. The CEO emphasized the stability of the U.S. agriculture industry and farmland as an asset class. The company finished the quarter with access to liquidity of $163.1 million.
View the results here.
Farmland Partners Continues Farmland Selling (2023/05/16)
Farmland Partners Inc. announced the sale of 1,370 acres of farmland across four states and made farmland sales totaling $32.5 million. The company’s President and CEO, Luca Fabbri, highlighted the role of asset appreciation in the returns from farmland investments and the robust health of the farming economy. The Arkansas farmland was sold to a local farmer, and FPI retains all the current solar energy option payments on the tract and a 30% interest in future revenue.
Jennifer Grafton Joins Farmland Partners Board of Directors (2023/04/22)
Farmland Partners Inc. has appointed Jennifer Grafton to its Board of Directors. Grafton brings a wealth of legal knowledge and executive leadership to the company. She is an experienced business executive with expertise in executive compensation, corporate governance, ESG, risk management, and regulatory matters. Farmland Partners is an internally managed real estate company that owns high-quality North American farmland and makes loans to farmers secured by farm real estate.
Farmland Partners Releases First Sustainability Report (2023/09.28)
Farmland Partners Inc. (NYSE: FPI) released an ESG report highlighting the Company’s initiatives. FPI’s tenants invest in soil health, practice conservation tillage, use variable rate technology, and participate in federal conservation programs. FPI expanded its renewable energy portfolio, continued its partnership with Ducks Unlimited, and adopted sustainability policies. The Company also calculated its greenhouse gas emissions for the first time.
Read more here.