REIT purchases 6,000 acres of Willamette Valley farmland
More organic acreage is expected to become available in Oregon’s Willamette Valley due to a recent real estate transaction involving a 6,000-acre farming operation.
The owned and leased properties of Olsen Agricultural Enterprises, a family-owned company, were recently taken over by a real estate investment trust operated by the Farmland LP investment firm.
Much of that acreage will be converted to organic production and rented to other growers who hope to expand their operations.
“The biggest thing holding them back has been access to organically certified land,” said Craig Wichner, managing partner of Farmland LP.
As part of the overhaul, the firm plans to significantly reduce the amount of property devoted to grass seed — traditionally one of Olsen’s staple crops — to use it for higher-value crops.
USDA certification rules require that land be managed without synthetic pesticides or fertilizers for three years before the crops it yields can be marketed as organic.
During that transition period, Farmland LP plans to grow clover on former grass seed acreage or use the fields for livestock pasture.
The real estate investment trust, or REIT, operated by Farmland LP is not the only one dedicated to agricultural properties.
Farmland Partners Inc. owns 53,000 acres, primarily in the Central and Southern U.S., while Gladstone Land Corp. owns about 11,500 acres, mostly in California and Florida.
While these companies are focused on buying land from farmers and then leasing it back to them, Farmland LP is unique in that it invests in organic certification and infrastructure upgrades to allow for more complex and profitable operations, Wichner said.
“We very much focus on adding value,” he said.
Aside from the former Olsen properties, Farmland LP has 1,500 acres near Corvallis, Ore., and 5,700 acres near San Francisco.
In all, the REIT manages 13,500 acres, roughly 10,000 acres of which it owns, and has roughly $100 million in assets.
Though the investment firm’s main business is leasing property to other growers, it will retain the employees of Olsen Agricultural Enterprises to run a farming subsidiary called Green Spring Farms.
The structure is similar to that of the Corvallis operation, where its Vitality Farms subsidiary uses part of the land for livestock production.
The company aims for diversified livestock, seed and vegetable crops to improve productivity, Wichner said. “We have essentially more complex rotations.”
For Olsen Agricultural Enterprises, the deal with Farmland LP provides a timely way to pay off its creditors while keeping its workers employed, said Roger Olsen, the company’s managing partner.
While the terms of the transaction were not disclosed, Olsen said the sale will allow the company to pay off its $34 million in debt.
“It’s a pretty big success after what happened,” he said.
In 2011, Olsen filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code, citing a major investment in its winery business at a time when the grass seed industry experienced a severe downturn.
The reorganized company emerged from bankruptcy the following year with a plan for paying off creditors.
While the firm was able to keep up on payments since then, the sale to Farmland LP provided the most straightforward way to “make everybody whole,” Olsen said.