Farmland Enters Lease Agreement with ESA Renewables for Solar Farm
- Mar 09, 2016
Denver—After leasing 28 acres to Iberdrola Renewables for a wind farm for Amazon last fall, Farmland Partners Inc. announced it entered a ground lease agreement with an affiliate of ESA Renewables LLC for a photovoltaic solar power generation facility on one of its North Carolina farms.
The agreement gives the power generating company the right to lease approximately 50 acres that will be converted by the tenant from farmland to an energy-generating parcel. The 50 acres are currently leased to a local farmer at $280 per acre per annum. Under the agreement’s terms, the initial annual rental rate will be $750 per acre, subject to annual increases of 1 percent. The agreement has an initial 15-year term, with the option to extend it. Rent payments will begin at the onset of construction, estimated to take place in approximately six months.
The 50 acres represent less than 4 percent of the approximately 1,400 acres of this farm; the significant rent increase on these acres drives the cap rate from 5 percent to 5.3 percent, a six percent overall increase.
“This North Carolina solar lease further demonstrates the additional upside rent potential we have on our farms,” said Paul Pittman, CEO of Farmland Partners. “We continue to focus on developing supplemental revenue streams for the farms we own in order to increase returns for our stockholders.”
Image courtesy of ESA Renewables