Farmland Partners Completes $289 Million Farmland Sale

Rhea-AI Summary

Farmland Partners Inc. (NYSE: FPI) has completed a $289 million all-cash sale of a farmland portfolio to Farmland Reserve, Inc. The transaction, which closed on October 16, 2024, involved 46 farms totaling 41,554 acres across seven states. FPI generated an approximate $50 million gain, representing a 21% increase over the portfolio's net book value.

The company has already used $146.6 million of the proceeds to reduce its debt. FPI is considering further debt reductions and may use the remaining capital for stock buybacks, new farmland acquisitions, and other corporate purposes. Additionally, FPI anticipates being in a position to issue a significant special dividend to stockholders at the end of the year as a result of this transaction.

Positive

• Completed $289 million all-cash sale of farmland portfolio
• Generated $50 million gain, 21% over net book value
• Reduced debt by $146.6 million
• Potential for stock buybacks and new farmland acquisitions
• Anticipated significant special dividend for stockholders

Negative

• Reduction in farmland assets (46 farms, 41,554 acres sold)

Insights

Financial Analyst

This $289 million farmland sale is a significant transaction for Farmland Partners, generating an impressive 21% gain over net book value. The $50 million profit demonstrates strong asset appreciation and effective portfolio management. Key impacts include:

• Substantial debt reduction of $146.6 million, improving the company's balance sheet
• Potential for further deleveraging, enhancing financial flexibility
• Possibility of stock buybacks, which could support share price
• Prospect of new farmland acquisitions, indicating continued growth strategy
• Likelihood of a significant special dividend, directly benefiting shareholders

This transaction showcases FPI's ability to capitalize on farmland value appreciation while strategically managing its portfolio. The multiple uses of proceeds indicate a balanced approach to capital allocation, potentially improving shareholder value through debt reduction, growth initiatives and direct returns.

Market Research Analyst

This transaction signals robust demand for quality farmland assets, reflecting broader trends in agricultural real estate. The 21% premium over book value suggests strong market valuation for farmland, potentially driven by factors such as food security concerns and inflation hedging. For investors, this deal offers several key takeaways:

• Validates FPI's business model of acquiring and managing farmland for appreciation
• Demonstrates liquidity in the farmland market, even for large portfolios
• Highlights FPI's ability to time the market and execute large-scale transactions
• Potential industry-wide implications, possibly spurring more M&A activity in the sector

The transaction's size and scope (>41,000 acres across multiple states) underscore the scale at which institutional investors like Farmland Reserve are operating in the agricultural real estate market. This could indicate continued consolidation and professionalization in the farmland ownership landscape.

Transaction Generated Approximate $50 Million Gain Over Net Book Value

DENVER--(BUSINESS WIRE)-- Farmland Partners Inc. (NYSE: FPI) (the “Company” or “FPI”) today confirmed that the recently announced sale of a portfolio of farmland to Farmland Reserve, Inc. (“Farmland Reserve”) closed as scheduled on October 16, 2024 (the “Transaction”).

The portfolio sold to Farmland Reserve consisted of 46 farms, comprising 41,554 acres of farmland in Arkansas, Florida, Louisiana, Mississippi, Nebraska, Oklahoma, and the Carolinas. The $289 million all-cash Transaction generated a total gain for FPI of approximately $50 million, or approximately 21 percent over the aggregate net book value of the farms within the portfolio.

FPI has already used $146.6 million of the proceeds from the Transaction to reduce its debt, and further debt reductions are being considered. In addition, remaining capital may be deployed for stock buybacks, new farmland acquisitions, and other corporate purposes. FPI also expects that the proceeds from the Transaction will put FPI in a position to make a significant special dividend to its stockholders at the end of the year.

About Farmland Partners Inc.

Farmland Partners Inc. is an internally managed real estate company that owns and seeks to acquire high-quality North American farmland and makes loans to farmers secured by farm real estate. As of the date of this release, the Company owned and/or managed approximately 136,000 acres of farmland in 15 states, including Arkansas, California, Colorado, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, Ohio, South Carolina, and Texas. In addition, the Company owns land and buildings for four agriculture equipment dealerships in Ohio leased to Ag Pro under the John Deere brand. The Company elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with the taxable year ended December 31, 2014. Additional information: www.farmlandpartners.com or (720) 452-3100.

About Farmland Reserve, Inc.

Farmland Reserve, https://farmlandreserve.org, is an integrated investment auxiliary of The Church of Jesus Christ of Latter-day Saints. Farmland Reserve’s earnings support the mission of the Church and its religious, humanitarian, educational, and charitable good works.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the federal securities laws, including, without limitation, statements with respect to our outlook and the outlook for the farm economy generally, proposed and pending acquisitions and dispositions, financing activities, crop yields and prices and anticipated rental rates. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” or similar expressions or their negatives, as well as statements in future tense. Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs and expectations, such forward-looking statements are not predictions of future events or guarantees of future performance, and our actual results could differ materially from those set forth in the forward-looking statements. Some factors that might cause such a difference include the following: the benefits to be realized in connection with the intended use of the proceeds from the Transaction; market factors and other considerations that could result in the Company deciding not to declare and pay a special dividend or to declare and pay a special dividend that is less than shareholders anticipate; the ongoing war in Ukraine and the ongoing conflict in the Middle East and their impacts on the world agriculture market, world food supply, the farm economy generally, and our tenants’ businesses; changes in trade policies in the United States and other countries that import agricultural products from the United States; high inflation and elevated interest rates; the onset of an economic recession in the United States and other countries that impact the farm economy; extreme weather events, such as droughts, tornadoes, hurricanes or floods; the impact of future public health crises on our business and on the economy and capital markets generally; general volatility of the capital markets and the market price of the Company’s common stock; changes in the Company’s business strategy, availability, terms and deployment of capital; the Company’s ability to refinance existing indebtedness at or prior to maturity on favorable terms, or at all; availability of qualified personnel; changes in the Company’s industry, interest rates or the general economy; adverse developments related to crop yields or crop prices; the degree and nature of the Company’s competition; the outcomes of ongoing litigation; the timing, price or amount of repurchases, if any, under the Company's share repurchase program; the ability to consummate acquisitions or dispositions under contract; and the other factors described in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, and the Company’s other filings with the Securities and Exchange Commission. Any forward-looking information presented herein is made only as of the date of this press release, and the Company does not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241021733604/en/

Phillip Hayes

phayes@farmlandpartners.com

Source: Farmland Partners Inc.

FAQ

What was the value of Farmland Partners' recent farmland sale?

Farmland Partners Inc. (NYSE: FPI) completed a $289 million all-cash sale of a farmland portfolio to Farmland Reserve, Inc. on October 16, 2024.

How many acres of farmland did FPI sell in the transaction?

FPI sold a portfolio consisting of 46 farms, comprising 41,554 acres of farmland across seven states.

What gain did Farmland Partners realize from the farmland sale?

FPI generated an approximate $50 million gain from the transaction, representing a 21% increase over the portfolio's net book value.

How has FPI used the proceeds from the $289 million farmland sale?

FPI has already used $146.6 million of the proceeds to reduce its debt and is considering further debt reductions, stock buybacks, new farmland acquisitions, and other corporate purposes.

Will FPI shareholders receive a dividend as a result of the farmland sale?

FPI anticipates being in a position to issue a significant special dividend to stockholders at the end of the year as a result of this transaction.