Farmland Partners Launches Strategic Partnership Targeting Farmland Investments in Qualified Opportunity Zones

Rhea-AI Summary

Farmland Partners Inc. (NYSE: FPI) has finalized agreements with Promised Land Opportunity Zone Farms I, LLC, for property sales and long-term management of farmland in economically distressed areas. The deal allows FPI to sell approximately $47 million worth of land while retaining management, thereby generating fees. This strategic initiative aims to enhance assets under management without dilutive equity capital raises. The OZ Fund focuses on farmland acquisitions in qualified opportunity zones, promising beneficial tax treatment for investments.

Positive

• Potential sale of approximately $47 million in farmland, enhancing liquidity.
• FPI retains management, allowing continued revenue generation through fees.
• Strategic initiative to increase assets under management without equity dilution.

Negative

• Sales are contingent on standard conditions, including financing, which may delay transactions.

DENVER, Jan. 21, 2021 /PRNewswire/ -- Farmland Partners Inc. (NYSE: FPI) (the "Company" or "FPI") announced today that its previously disclosed negotiations relating to an opportunity zone fund have resulted in the signing of a property sale and long-term management agreements with Promised Land Opportunity Zone Farms I, LLC ("OZ Fund"), a private investment fund focused on acquiring and improving farmland in qualified opportunity zones in the United States ("QOZs"), as designated under U.S. tax provisions enacted in 2017. FPI will serve in a property management capacity for the OZ Fund and will have the ability to acquire equity interests in the OZ Fund. The Company will also have a right of first offer to purchase properties owned by the OZ Fund. 

"The relationship with the OZ Fund reflects a strategic initiative to use privately capitalized vehicles to increase our assets under management and generate fees-for-service without the need to raise equity capital at potentially dilutive prices," stated Paul Pittman, FPI's Chairman and CEO. "As the OZ Fund grows with new properties, our property management income will increase as well as the overall scale of the farmland that we manage. The transaction creates value for FPI shareholders by selling FPI land at a premium to book value while allowing us to retain management of the properties in exchange for management fees."

The property sale agreement provides for, among other things, FPI's potential sale of approximately $47 million and 6,500 acres across 12 farms. The first six farms are expected to close by March, but all closings are subject to customary conditions, including financing, and other contingencies. The OZ Fund is also targeting farmland owned by third parties and located in QOZs for potential acquisition. FPI has committed to fund 10% of the equity required to acquire farmland owned by third parties up to a maximum of $20 million in exchange for interests in the OZ Fund. FPI will serve as property manager for all farmland assets owned by the OZ Fund in exchange for property management fees.    

The OZ Fund was created to acquire, improve, and stimulate economic development of land located in QOZs. QOZs are certain economically distressed communities in the United States where new investments, under certain conditions, may be eligible for preferential tax treatment. The OZ Fund was founded and is controlled by Servant Financial, a Chicago-based investment management firm. 

"This is a win-win," commented John Heneghan, President of Servant Financial. "Promised Land Opportunity Zone Fund brings new sources of capital to farmland, increases economic capacity and productivity for farmers, and promotes employment across agricultural communities. We believe the OZ Fund offers economic, environmental, and social impacts that are compelling for investors. We are pleased to collaborate with Farmland Partners, the farmland industry's leading REIT, on our unique and innovative opportunity zone vehicle."

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 owns approximately 155,000 acres in 16 states, including Alabama, Arkansas, California, Colorado, Florida, Georgia, Illinois, Kansas, Louisiana, Michigan, Mississippi, Nebraska, North Carolina, South Carolina, South Dakota and Virginia. We have approximately 26 crop types and over 100 tenants. 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 Servant Financial

Servant Financial, Ltd. is a Chicago-based investment management firm founded in 2003. The firm serves the diverse investment, risk management, and finance needs of individuals, high net worth clients and family offices. Servant Financial focuses on alternative investments – private equity and hedge funds, ETFs, and socially responsible investments. Additional information: www.servantfinancial.com or (630) 264-0127.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the federal securities laws, including, without limitation, statements concerning the transaction, the anticipated timeline for closing, the Company's ability to sell additional properties to the OZ Fund, the anticipated gross proceeds from the sales to the OZ Fund, the anticipated managements fees to be received by FPI, and the ability of the OZ Fund to acquire additional farmland properties. 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 ability to consummate the transaction described above, satisfaction of qualified opportunity zone regulations as determined by OZ Fund third-party advisors, and the general economic conditions. 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.

 

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SOURCE Farmland Partners Inc.

FAQ

What is the recent partnership involving Farmland Partners Inc. (FPI)?

FPI has partnered with Promised Land Opportunity Zone Farms I, LLC, for property sales and management agreements.

What is the financial impact of the land sale by FPI?

The agreement includes a potential sale of $47 million in farmland, enhancing liquidity.

How does the OZ Fund benefit Farmland Partners (FPI)?

The OZ Fund allows FPI to retain management of properties while generating fees without equity dilution.

What are qualified opportunity zones (QOZs)?

QOZs are economically distressed communities eligible for preferential tax treatment on new investments.

When are the sales to the OZ Fund expected to close?

The first six farm closings are expected by March, subject to customary conditions.