NYSE-traded farmland REIT Farmland Partners plans to pursue about $37 million of asset sales in the coming six or seven months, according to its chief executive.
Paul Pittman said a combination of adverse weather events, ongoing trade tensions and the aftermath of July’s anonymous allegations of improprieties at the firm had combined to create “a year with many challenges.”
Denver-headquartered FPI had completed about $37 million in asset sales in the months since publication of the article – posted on the Seeking Alpha website under the name of Rota Fortunae – and Pittman said he expected a similar volume of sales in the coming six to seven months.
Speaking on FPI’s fourth quarter earnings call this month, he added that FPI would look to sell properties with an average cap-rate of 4 percent and likely devote 45 percent of proceeds from asset sales to pay debt with the rest repurchasing stock.
“We’re not trying to go out of business here, but when we have a chance to sell a farm at either a very good price or a farm that we – for whatever reason, it’s in a part of the country that we don’t have so much in so management costs are higher or the cap-rate we don’t particularly like; we’re reasonably selective about the sales process,” said Pittman. “We’re not likely to sell our highest cap-rate returning farms, although if someone really overpaid we would – but we’re more likely to be pruning on the lower end of the cap rate scale.”
In July, Pittman characterized FPI’s first asset sale – of five farms totaling 1,245 acres for $9.2 million – as unrelated to the Rota Fortunae accusations, which had been published the week before.
He said the sales were related to plans to sell as much as $40 million in farmland, in response to performance of the company’s stock he attributed partially to inaccurate media coverage of agriculture.
Earlier in the year, Pittman told analysts that any future liquidation of the REIT’s portfolio would occur through individual property sales, rather than a bulk sale to a private equity firm.
On this month’s earnings call, Pittman acknowledged that the Rota Fortunae article sapped company morale and effectively stopped FPI’s growth. Pittman added that the article had caused FPI to incur extra costs for retaining employees and for a class action lawsuit it is pursuing against its authors.
“It is becoming clear there were co-conspirators in the fraud and that Rota Fortunae was paid to write that article,” Pittman alleged. “The perpetrators of this financial crime are still making an effort to hide by playing shenanigans in federal court.”
FPI’s farmland portfolio consisted of 162,000 acres across 17 states that were valued at $1.2 billion as of the end of September.
FPI representatives did not reply to messages seeking further detail by press time.