Gladstone issues $32.4 million three- to seven-year bonds under Farmer Mac facility

Morgantown, W.Va., Jan. 19 – Private placement activity remained muted on Thursday with one reported deal from Gladstone Land Corp.

Gladstone Land issued four separate bonds under its $125 million facility with Federal Agricultural Mortgage Corp. for total proceeds of $32.4 million, according to an 8-K filing with the Securities and Exchange Commission.

The interest-only bonds have terms ranging from three to seven years and will bear interest at a weighted average fixed rate of 3.42% throughout their terms.

Bonds issued under the Farmer Mac facility are secured by mortgage loans on agricultural real estate owned by the company and have an effective loan-to-value ratio of 60% of the underlying agricultural real estate.

In June 2016, Gladstone had extended its bond purchase agreement with Farmer Mac by two years to December 2018 and increased the maximum borrowing capacity to $125 million from $75 million.

The company used the bond proceeds to fund the majority of its acquisition of real property located in Florida from Pero Greenridge Farms, LLC and PFF Land Holdings, LLC for $54 million.

The company funded the remainder of the purchase price with cash on hand and a draw on one of its existing $25 million lines of credit with Metropolitan Life Insurance Co.

The MetLife line of credit is scheduled to mature on April 5, 2024, and advances bear interest at Libor plus a spread of 225 basis points, with a minimum annualized rate of 2.5%, plus a 20-bps unused fee on undrawn amounts.

The line of credit is collateralized by other real property owned by Gladstone.

Gladstone Land is a real estate investment trust based in McLean, Va., that invests in farmland.

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