Sierra Foothills Pistachio Orchard
Target Net IRR
Net Cash Yield
Net Equity Multiple
- 11 years
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Sierra Foothills Pistachio Orchard represents an excellent opportunity to invest in a part-turnkey, part-development tree nut orchard planted to a crop for which there is surging domestic and global demand. Pistachios have become one of the world’s favorite snack foods, with global consumption having nearly doubled since 2010. The US supplies nearly half of the global pistachio crop; 99% of that production comes from California, where FarmTogether already manages several pistachio orchards.
This deal will be our 4th pistachio orchard added to the portfolio over the last 12 months, and will be closely co-located with two other portfolio properties: Deer Creek and Fawn Creek Pistachio Orchards. Each of these properties is in the Terra Bella Irrigation District, which has a strong historical track record and has class 1 rights to federally-allocated surface water from the Friant-Kern Canal. The last 15 years of deliveries from the district have averaged about 1.5-2 acre-feet per acre, which is sufficient to satisfy pistachios' demands for irrigation water in this region, especially when considering this area's climate and additional water from precipitation. Terra Bella Irrigation District also participates in long-run water banking with neighboring districts as a fail-safe strategy during drier years. Meanwhile, the close proximity of these farms will provide various logistical advantages in operations, including allowing us the ability to share resources between farms and manage risks in various factors of production at a portfolio level as well as for each individual farm.
Sierra Foothills Pistachio Orchard is modeled as an 11-year hold with a target net IRR of 9.7%, a target net average cash yield of 8.7%*, and a target multiple on invested capital of 2.4x. At exit, we believe this property will be attractive to large growers and investors.
* Note that our target net average cash yield of 8.7% includes both farming profits and returns of reserve capital.