By Jorge Mercado and Henry Dubroff Wednesday, February 1st, 2023

The future of Santa Paula-based Limoneira came into sharper focus on Feb. 1 when the company sold a major agribusiness holding in the Tulare area for $100 million, recouping $99 million in cash while also reaching an agreement to grow, pack and market lemons produced on the property.

PGIM Agricultural Investments, a unit of PGIM Real Estate Finance, LLC acquired Limoneira’s 3,537-acre assemblage, including 2,700 planted acres, 231 plantable acres and 606 acres of open space.

Limoneira will manage the property for at least one year and provide packing and marketing services for an additional five.

Analysts appear to be a fan of the move as the company’s shares rose about 10% after the announcement, boosting its market cap by about $20 million.

Shares of Limoneira were above $14 a share on Feb. 1, the first time hitting that high since June.

“The sale doesn’t touch the crown jewels in Ventura County and we never had that much cash before,” Harold Edwards, President and CEO of Limoneria, told the Business Times.

Edwards said the deal would be accretive to earnings and mark a transition to an “asset-light” model that would focus more on cash flow and returning capital to shareholders.

The transaction also reflects a new strategic plan adopted last year by the board of directors, Edwards added, a big part of which is significantly reducing its overall debt.

“The COVID-19 pandemic caused an oversupply in lemons and squeezed our margins,” Edwards said, which prompted the strategic review.

In October, Limoneira sold its Oxnard Lemon Packing Facility for $20 million, which it did to decrease its overall debt.

The next month, the company closed the sale of its real estate development property known as “Sevilla,” in Santa Maria, for $2.6 million in cash proceeds.

Now, including the Tulare sale, Limoneira has sold $130 million of $150 million in assets “earmarked for sale” during a strategic review last year.

“To be able to knock out $130 million in debt, it is pretty satisfying,” Edwards said.

“We can grow the old fashion way and recruit growers for our packing house operation.”

It continues to anticipate some $115 million over seven years from proceeds from its Harvest at Limoneira project, a housing and commercial real estate venture on the east end of Santa Paula.

With a large parcel, Windfall ranch in Creston also identified as a non-core asset, the company is likely to achieve or possibly exceed the $150 million goal.
Edwards said that the Tulare property was a very exciting buy for many people, with about 47 interested parties and five offers ranging between $50 million and $100 million.

He said that overall, the company was losing money on growing lemons in the valley due to low commodity pricing and inflation combined.

As such, the company is full steam ahead on really honing in on its Ventura County assets and getting rid of the rest.

For the full-year fiscal 2022, Limoneira reported a record revenue generated of $184.6 million, an 11% increase driven by record avocado and orange sales.

Fourth quarter sales also increased 18% year-over-year to $38.2 million.

These numbers, combined with what it hopes to generate from its Harvest at Limoneira project, will provide the company leverage for years to come.

“We will look to build new storage capacity in Santa Paula and clear a path for growth in packing and recruiting growers looking for a new home,” Edwards said.

“We are going to focus on relentless execution.”