In a transformative deal, Limoneira Co. has landed a partner for its Santa Paula Gateway project, unlocking as much as $100 million in cash flow over the next 10 years.
In a statement, Limoneira said it has joined with The Lewis Group of Companies, a real estate investment company based in Claremont, to develop the Gateway project, a move that will provide $20 million in cash when the deal closes in November. In a phone interview, CEO Harold Edwards said the transaction is “the biggest announcement in the company’s history.”
However, Wall Street, facing a down day, was focused on a shortfall in quarterly earnings also announced Sept. 9 that knocked 12 percent off the value of Limoneira shares.
Edwards said the Lewis Group transaction will provide the next phase for the development in Santa Paula with 1,500 homes ranging in price from the $300,000s to $700,000. “It’s transformative for Limoneira and the city of Santa Paula,” he said. “It’s the first of potentially many more to come.”
Under the agreement, The Lewis Group will become a joint venture partner in the development with a 50 percent ownership stake. Edwards said that several minor changes to the development plan and a final agreement should be completed in November, at which time Limoneira will receive $18 million in addition to a $2 million deposit already received.
Limoneira said the project will begin selling developed lots to homebuilders in the fourth quarter of 2017. Founded in 1955, privately-owned Lewis Group remains in the hands of its founding family. It has developed more than 57,000 homes, 10,000 apartments and 14 million square feet of retail, office and industrial space. “Since 1955, the Lewis organization has developed new communities in California, Nevada, Arizona, and Utah, totaling in excess of 25,000 acres and housing more than 100,000 families,” the statement said.
In its earnings report, Limoneira Co. reported fiscal third-quarter earnings of $5.3 million or 36 cents per share, falling short of Wall Street estimates of 43 cents. The company’s revenue exceeded forecasts coming in at $29.8 million versus a forecast $26 million.
Limoneira shares traded down $2.38 or 12.2 percent after the earnings announcement.