Farmland Partners Enters Ground Lease Agreement For S.C. Solar Farm

Farmland Partners Inc. has entered into a ground lease 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.”

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.

— Solar Builder magazine

[source: http://solarbuildermag.com/news/farmland-partners-enters-ground-lease-agreement-for-s-c-solar-farm/]