Olam International has announced it has sold 5,100 acres of its Californian farm assets to real estate investor Farmland Partners for $110 million.
The agri-business has also entered into a revenue sharing model with Farmland Partners where it will pay the latter a share of the annual revenue, while it continues to operate the orchards for 25 years.
Farmland Partners owns and aims to acquire quality farmland throughout North America. It owns more than 300 farms, totalling 154,000 acres across seventeen states.
Olam managing director Ashok Krishen believes Farmland Partners represents a strong strategic fit for Olam’s business model.
“As part of our edible nuts strategy, we intend to further invest in growing almonds, pistachios and walnuts in California,” he said.
“We have built a sizeable portfolio of prime orchards and have adopted sustainable and industry leading agricultural practices in managing these orchards. We had been looking for the right partner who sees the long-term value of farming, while we are looking for an asset light model to participate in the production economics of the tree crops.”
Farmland Partners CEO Paul Pittman added: “We are excited to work with Olam and look forward to building upon this relationship. We have a high degree of respect for Olam’s team of exceptionally talented operators.
“Further, we look forward to bringing these properties into our portfolio. They are unique, high quality farms in the heart of California’s tree nut industry. The properties and associated agreements will bring higher-return permanent crop production into our portfolio, furthering our goal of delivering a well-balanced portfolio of US farmland to our stockholders.”
It is expected that the transaction is completed by the end of November 2017.
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