Key Takeaways:
- Farmland Partners Inc. recorded a net income of $4.3 million in Q3 2023, a significant increase from $1.1 million in the same period last year.
- The company completed 35 farm dispositions for approximately $71.1 million aggregate consideration.
- One farm was acquired for a total consideration of $11.0 million.
- The company renewed approximately 65% of leases expiring in 2023, with average rent increases of 18% to 20%.
- Farmland Partners Inc. plans to sell up to approximately $65 million of additional farmland and has two acquisition transactions under advanced negotiations for an aggregate purchase price of $16.1 million.
Farmland Partners Inc. (NYSE: FPI), a leading player in the U.S. agriculture industry, reported its financial results for the third quarter of 2023. The company recorded a net income of $4.3 million, a substantial increase compared to $1.1 million in Q3 2022. This performance comes amid global economic and geopolitical uncertainties, highlighting the stability of farmland as an asset class.
Farm Dispositions and Acquisitions
During the quarter, Farmland Partners Inc. completed 35 farm dispositions for approximately $71.1 million aggregate consideration. These dispositions resulted in an aggregate gain on sale of approximately $10.3 million. Additionally, the company completed one farm acquisition for a total consideration of $11.0 million.
Lease Renewals and Rent Increases
After the end of the third quarter, the company renewed approximately 65% of leases expiring in 2023. These renewals came with average rent increases ranging from 18% to 20%, indicating the robust health of the farm economy and the overall quality of Farmland Partners Inc.’s portfolio.
Planned Transactions
Farmland Partners Inc. plans to sell up to approximately $65 million of additional farmland. This would bring the company’s total up to approximately $190 million in sales for the year. Moreover, the company has two acquisition transactions under advanced negotiations, with an aggregate purchase price of $16.1 million.
CEO’s Perspective
Luca Fabbri, President and Chief Executive Officer of Farmland Partners Inc., emphasized the stability offered by the U.S. agriculture industry and farmland as an asset class. He stated, “We have been leveraging this stability by continuing to selectively prune our portfolio, focusing on farms that are not long-term strategic fits for the portfolio.”
Financial Health and Liquidity
The company finished the quarter with access to liquidity of $163.1 million. This liquidity will likely support the company’s future farm acquisitions and other strategic initiatives to enhance shareholder value.
Farmland Partners Inc. is positioning itself for sustainable growth in the agriculture sector by focusing on strategic dispositions and acquisitions and strong lease renewals. The company’s performance in Q3 2023 serves as a testament to the resilience and potential of the U.S. agriculture industry, even in the face of broader economic challenges.
Photo by Casey Horner on Unsplash
