DENVER, Oct. 13, 2015 /PRNewswire/ -- Farmland Partners Inc. (NYSE:FPI) (the "Company") today announced that it has entered into a ground lease agreement (the "Agreement") for a solar farm on one of its South Carolina farms. The Agreement provides that the lessee will lease a minimum of 60 acres and a maximum of 200 acres of row crop farmland for purposes of converting the farmland, at the lessee's cost, into a modern solar farm. The 200 acres available to the lessee are currently leased to a local farmer for an annual rental rate of approximately $200 per acre, and, under the terms of the Agreement, will have an initial annual rental rate of $1,000 per acre, subject to annual increases of 1.5% beginning in the fifth year of the lease. The Agreement has an initial 25-year term with the potential for up to two five-year extensions and certain rights for an early termination beginning after 15 years. As an illustration, if the lessee uses 130 of the 200 acres available for the solar farm, the total rent across the 2,183 acres of tillable farmland available on the South Carolina farm will increase by approximately 25% and increase the cap rate to more than 6.3%. If the full 200 acres are converted to solar farm use, the farm-wide cap rate will be more than 7.0%.
"This solar lease and the North Carolina wind lease we announced last week demonstrate some of the additional rent potential we have on our farms," said Paul Pittman, CEO of the Company. "Like the wind farm lease, this solar lease is evidence of our commitment to create value for our stockholders by considering alternative and incremental revenue streams from our farms. We believe there are many other potential avenues to increase our rental revenue beyond traditional agricultural rents in the coming years."
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 123 farms with an aggregate of 72,423 acres in Arkansas, Colorado, Georgia, Illinois, Kansas, Louisiana, Michigan, Mississippi, Nebraska, North Carolina, South Carolina 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 the solar farm, 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.