Farmland Partners To Acquire American Farmland Company

September 12, 2016 12:49 PM
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Farmland Partners Inc. (FPI), a publicly traded real estate investment trust, has been the buzz of farm country for more than a year. They've bought farmland and in some cases paid prices farmers couldn't afford. Today, FPI announced it will acquire American Farmland Company (AFCO) to create one giant land corporation. The combined company will own 133,000 acres, worth $850 million, across 16 states, both coasts, the Midwest, the Plains and the Delta, according to officials.

“FPI’s assets are comprised primarily of premier row crop farmland, while AFCO’s portfolio is concentrated in high-quality specialty and permanent crop farms across the U.S. On a consolidated basis, the combined company’s portfolio is expected to consist of approximately 75% row crop farmland and 25% specialty crops by value,” officials said in a joint news release.

The acquisition will secure Farmland Partners' role as a leading farmland real estate platform in the U.S., officials say.

“Thanks to increased scale, we also expect to realize a reduction in overall costs as a percentage of portfolio value, creating superior value for our and AFCO’s stockholders and our respective farmer partners,” said Paul Pittman, chairman and CEO of Farmland Partners.

The acquisition will mean some changes for AFCO shareholders, the news release says. 

“Under the terms of the agreement, each share of AFCO common stock and each AFCO operating partnership unit will be converted into the right to receive 0.7417 shares (or units) of newly issued FPI common stock (or units). On a pro-forma fully diluted basis, following the merger, former FPI equity holders will hold approximately 65% of the combined company’s equity, and former AFCO equity holders will hold approximately 35%. The stock-for-stock merger is intended to qualify as a tax-free reorganization,” the release said.

Farmland Partners and AFCO have been in talks about the merger since April, according to Thomas S.T. Gimbel, CEO of AFCO. Both boards of directors have approved the transaction and expect it to be complete by the end of this year or the first quarter of 2017.

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Spell Check

Lincoln, NE
9/12/2016 10:03 PM

  Family farms have survived for generations expanding land holdings, renting and share-cropping land, purchase larger and newer equipment and increase livestock numbers. All land expansion by farmers or investors required capital as loans or investments as long term plans. With the struggles to operate under present operational costs of inputs, equipment improvements and limited net profits if any exists, many if not most farmers are forced to refinance, hopeful to pay the interest on loans, work for nothing this year and hopefully lenders will find ways to allow farmers and ranchers to extend their loans. NEXT YEAR WILL BE BETTER FOR FARMERS AND RANCHERS, HOPEFULLY.

Mitchell, SD
9/13/2016 10:20 AM

  This story (and the recent buying history) of these two farmland REITS (and others) continues to amaze me. It will be interesting to continue to watch from the outside. If Ag, and this includes most of Ag (grains, livestock, land prices, etc) are truly in a "RE-adjusting time", and recognizing these REITS were formed late in the "UP-cycle", paying some pretty high prices for what they acquired (I am sure most of the sellers are happy to be counting their money), and recognizing that most of their farmer tenants (like all active farmers) are going to be trying to adjust down their input costs, including the cash rents that many have over-paid.......I wonder what kind of returns (going forward) some of these RE investments will be throwing off? I think it will be interesting to watch. As an investor in land, etc., I have always tried to practice what I preach, "buy low, and sell high". As in all, "time will tell".

Grantsburg, IN
1/10/2017 07:37 AM

  Outside investment in farmland along with farmland management will bring the tenant farmer back to the days of the poor sharecropper. It's just a different landlord. They provide no benefit. In fact more downside than anything. Driving up prices above what farmers can pay, higher cash rents, etc. It is high time for farmers to take control of our future. We have the most important job in the world. WE FEED EVERYONE. We should be paid more than doctors, lawyers,and especially celebrities and athletes.


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