Virginia investor spends big on Kern farmland with access to banked water
Oct. 15—In a sizable series of transactions that speaks to looming uncertainties in local ag, a Wasco farming family recently sold 2,400 acres in west Bakersfield — and with them, options to buy 45,000 acre-feet of water banked by the Semitropic Water Storage District — to a Virginia-based investment company drawn to California farmland.
Publicly traded Gladstone Land Corp. this week reported paying the Gardiner family a total of $84.2 million for the real estate and water options, at least some of which have already been exercised. The Gardiners also signed 10-year leases with Gladstone to continue farming pistachios and almonds on the properties.
Observers say the series of three purchases dating back to June appears to have been as much or more about water as soil and tree nuts, and that such deals are becoming more common because of uncertainties relating to the the ongoing drought.
Keith Gardiner acknowledged concerns about water scarcity played into his family's decision to part with the real estate.
"It's a little bit about water, to tell you the truth," he said Friday. "We're a little bit unsure what the future is in California."
Water has become a key driver in the local ag-land market not just because of the drought but also upcoming limitations on pumping groundwater. Ag real estate with good water access commands historically strong prices, while parcels with lesser access have fallen in value.
Gladstone said in August, when it announced the second of three deals with the Gardiners, that it owned 158 farms comprising about 107,000 acres in 14 states. In a news release Tuesday the company said it now owns more than 40 properties in California, and that all have adequate water supplies.
"We believe the additional water we're buying in this transaction will help the production on this farm continue at good levels for many years, while also providing additional security to other farms in the area if there is ever a need for additional water," President and CEO David Gladstone said in the release.
Semitropic did not respond to a request for comment Friday.
Gladstone's news release caught the eye of Bay Area ag writer Len Richardson, who said the company may have bought the Gardiners' land mainly for the water, adding, "You know, there's people buying land for water all over the state."
Kern County farmland broker Mike Ming noted uncertainties surrounding Central Valley water supplies can certainly sweeten local farmland transactions.
"I think Gladstone is a very smart entity in buying a property that's supplied (by a water bank), that has a supplemental supply of water to farm into the future," Ming said.
"(To) everybody now — a lot of the big farming interests and big-corporation farming interests — water is the No. 1, 2 and 3 thing they ask about before anything else," he said.
Gardiner said his family had owned the properties, all contiguous, for at least 15 years. They contain mature pistachio and almond orchards, he added.
He said he expects the water at issue in the purchase options will be used to irrigate his trees, and that the sale proceeds will be invested locally.
"We're just redeploying some of that capital back into our assets and our community," he said.
