Summary
Gladstone Land is one of only two REITs that invest in farmland and is the more respected of the two.
The trust primarily owns farmland in California, Florida, and the surrounding areas where the primary crops grown are fruits, vegetables, and nuts.
This gives its land better fundamentals than what we find in the grain belt.
The trust has generally grown its distribution over time, but still yields a paltry 3.8%.
The trust did not generate sufficient FFO in the most recent quarter to cover its distribution. This needs to be fixed going forward.
For the past few weeks, I have been thinking about investing in raw land. I must admit that it has a certain appeal as it is a real asset that can be physically touched, you can see it, stand on it, and similar things. In addition, in ages past, it provided people with a way to feed their families, which brings us to our topic of discussion below. Due to the efforts of David Gladstone and his firm, we have a fairly unique real estate investment trust, Gladstone Land (LAND), which invests in farmland. The basic business model is to lease farmland to people and companies that will then farm it. There is a second REIT in existence that uses a similar business model, Farmland Partners Inc. (FPI), but as Gladstone Land is the more respected of the two, it will be the first one that we evaluate as an investment.
