DENVER, March 7, 2016 /PRNewswire/ -- Farmland Partners Inc. (NYSE: FPI) (the "Company") today announced that it has entered into a ground lease agreement (the "Agreement") for a photovoltaic solar power generation facility on one of its North Carolina farms. The Agreement provides an affiliate of ESA Renewables LLC with the right to lease approximately 50 acres that will be converted, at the tenant's cost, from farming to energy generation. The 50 acres are currently leased to a local farmer for an annual rental rate of approximately $280 per acre. Under the terms of the Agreement, the initial annual rental rate will be $750 per acre, subject to annual increases of 1.0%. The Agreement has an initial 15-year term with potential for extensions. Rent payments will begin at the onset of construction estimated to be in approximately six months.
While the 50 acres is less than 4% of the approximately 1,400 acres contained in this farm, the significant rent increase on these acres drives the cap rate from 5.0% to 5.3%, a 6% overall increase.
With this Agreement, Farmland Partners will have three farms with solar leases, on a total of 1,200 acres, and a farm with a wind lease on approximately 28 acres. These three farms are located in North and South Carolina.
"This North Carolina solar lease further demonstrates the additional upside rent potential we have on our farms," said Paul Pittman, CEO of the Company. "We continue to focus on developing supplemental revenue streams for the farms we own in order to increase returns for our stockholders."
The Agreement contains certain conditions, including a 1-year due diligence period during which the potential tenant may terminate the lease.
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. The Company's portfolio is comprised of 258 farms with an aggregate of 108,162 acres (including 6 farms totaling 8,799 acres under contract) in Arkansas, Colorado, Georgia, Illinois, Kansas, Louisiana, Michigan, Mississippi, Nebraska, North Carolina, South Carolina, Texas and Virginia. 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.
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws, including statements regarding the number of acres to be used for solar farms, increased cap rates and returns as a result of the Agreement and opportunities for additional alternative uses of farmland. Forward-looking statements are subject to known and unknown risks and uncertainties, many of which may be beyond the Company's control. The Company faces many risks that could cause its actual performance to differ materially from the results contemplated by its forward-looking statements, including, without limitation, the risks related to leasing farmland to third-party tenants, including delays in executing new leases and failure to negotiate leases on terms that will enable the Company to achieve its expected returns and the risks associated with leases for non-agricultural purposes. These forward-looking statements are based upon the Company's present expectations, but the events, expectations, intentions or prospects suggested by or reflected in these statements are not guaranteed to occur or be achieved, and you should not place undue reliance on such statements. Furthermore, the Company disclaims any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, of new information, data or methods, future events or other changes, except as may be required by law. For a further discussion of these and other factors that could impact the Company's future results, performance or transactions, see the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 and other documents filed by the Company with the Securities and Exchange Commission.
SOURCE Farmland Partners Inc.