Denver-based REIT Farmland Partners, Inc., (FPI) announced today it has entered into a purchase agreement to acquire a 7,400-acre farm in Louisiana for a purchase price of $31.8 million in cash. That figures to about $4,297 an acre. No additional information concerning the identity of the seller or the location of the farm was included in the company's release. The acquisition is expected to close in the first quarter of next year, subject to customary closing conditions, including satisfactory completion of FPI's due diligence.
The company also announced it has entered into a three-year lease agreement with the seller of the Louisiana farm. The lease agreement will have rental payments based on a percentage of gross farm proceeds and includes a minimum cash payment for the use of improvements on the farm. Using conservative assumptions of commodity prices and crop yields, FPI says it believes the return will be approximately 5% annually.
The announced purchase is FPI's third largest acquisition to date. It follows on the heels of the acquisition of 22,300 acres in north central Illinois for $197 million earlier this month.
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