DENVER, Jan. 13, 2016 /PRNewswire/ -- Farmland Partners Inc. (NYSE: FPI) (the "Company") today announced that it has entered into two additional ground lease agreements (the "Agreements") for photovoltaic solar power generation facilities on two of its South Carolina farms. The Agreements offer the right to lease up to an aggregate of approximately 979 acres that may be converted, at the tenant's cost, from farming operations to energy generation. The two farms are currently leased to local farmers for a blended annual rental rate of approximately $210 per acre for the 2,579 tillable acres of the farms. Under the terms of the Agreements, the initial average annual rental rate will be $822 per acre for the 979 acres subject to solar development, with annual rent increases of 1.5% beginning in the fifth year of the lease terms. The Agreements have initial 20-year terms with potential for extensions. Rent payments under the Agreements will begin upon the onset of construction of the solar energy generation systems on the respective farms. Should all of the 979 acres be converted to solar, the farm-wide cap rate on the 2,579 tillable acres will increase to 10.6%, a 105% improvement over the current cap rate. With these Agreements, Farmland Partners will have three solar leases in place, on a total of 1,179 acres, and a wind lease on a farm, on approximately 28 acres, all located in North and South Carolina.
"These South Carolina solar leases further demonstrate the additional upside rent potential for non-ag uses 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 Agreements contain certain conditions, including a one-year due diligence period during which the potential tenant may terminate either of the leases.
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 257 farms with an aggregate of 107,838 acres (including 126 farms totaling 32,963 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 Agreements 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.