Limoneira Co., the 120-year-old global agribusiness, announced today that it has entered into a purchase agreement to acquire 157 acres of lemon, orange and specialty citrus orchards in the San Joaquin Valley for approximately $3.3 million. The transaction is expected to close in 60 days.
The orchards are being acquired thanks to purchase options within operating leases the Santa Paula-based company has had since 2012. Limoneira leases about 1,000 acres of lemon, orange, specialty citrus and other crops at what’s known as the Sheldon Ranch.
According to a news release from the company, the lease agreements include base rent of $500 per acre and contingent rent of 50 percent of the operating profit of the leased property. Total rent for fiscal year 2015 on the acquired property is estimated at $100,000 by the transaction’s closing date and totaled $231,000 for the previous year.
Roughly $2.8 million in proceeds from the previously announced sale of the company’s Wilson Ranch — expected to close next month — is getting rolled into the new purchase.
The sale of the 52-acre Wilson Ranch and purchase of the 157 acres of citrus orchards, in real estate terms, qualifies as a like-kind exchange allowing Limoneira to defer about $1 million in profit from the sale for tax purposes.
The company has nearly 11,000 acres of agricultural lands, real estate properties and water rights in California and Arizona.