Farmland Partners Inc. ( FPI ) shares are trading lower on Thursday.

The company said it is selling a portfolio of 46 farms, comprising 41,554 acres of farmland, for $289 million in a single transaction with Farmland Reserve.

The portfolio includes farms across several regions and states, including Arkansas, Florida, Louisiana, Mississippi, Nebraska, Oklahoma, and the Carolinas. 

“Farmland is a ‘total return’ investment, with asset appreciation typically accounting for a majority of the overall return on invested capital,” said Luca Fabbri, FPI’s President and CEO.

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The CEO indicated that the firm plans to use the resulting capital to reduce debt by around $140 million, buy back stock, pursue acquisitions, and address other corporate purposes.

Additionally, he noted that similar to the previous year, they expect to be able to make a significant special distribution to shareholders at year-end.

According to Benzinga Pro, FPI stock has gained over 2% in the past year. The company had a total debt outstanding of approximately $393.0 million on June 30, 2024.

As of June 30, the company had access to liquidity of $163.8 million, consisting of $5.7 million in cash and $158.1 million in undrawn availability under its credit facilities compared to cash of $5.5 million and $201.1 million in undrawn availability under its credit facilities at December 31, 2023.

Following the latest development, the company’s total gain on sale will be approximately $50 million, or approximately 21% over the aggregate net book value of the farms comprising the portfolio.

In 2023, FPI also sold approximately $200 million of assets at a gain in excess of 20%.

Price Action: FPI shares are trading lower by 1.04% to $10.20 premarket at last check Thursday.

Image via Shutterstock

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