Mastronardi purchases indoor leafy greens farm for $127M

AppHarvest has entered an agreement with Mastronardi Berea LLC, a joint venture between Mastronardi Produce and COFRA Holding, for the sale-leaseback of its Berea, KY, high-tech indoor farm for leafy greens for approximately $127 million with an initial lease rate of 7.5 percent over 10 years, with four renewal terms of five years each.

Mastronardi Produce is AppHarvest’s exclusive marketing and distribution partner, which has sold AppHarvest’s produce, including tomatoes, leafy greens and strawberries, in some of the top national grocery store chains, restaurants and foodservice outlets. Some of the proceeds of the sale-leaseback will be used to repay the previously announced $30 million bridge loan from Mastronardi Produce to AppHarvest and the first two years of prepaid rent at the Berea facility.

“The AppHarvest team has worked relentlessly this year to get the four-farm network operational, and those efforts have paid off with the quadrupling of farms in our network and diversifying our crop set,” said AppHarvest Founder and CEO Jonathan Webb. “The team is now focused on operations to ramp up production and revenue from the four high-tech farms.”

AppHarvest also announced that its Richmond, KY, farm is officially open and has begun growing Campari brand tomatoes. The first harvest at Richmond is anticipated in early January, which will mean that for the first time AppHarvest is expected to have commercial shipments coming from each facility in its four-farm network. Half of the Richmond farm currently is planted, and the other half is expected to be planted in 2023.

The company has quadrupled the number of farms operating in its network in 2022. Already this year, it has opened two other high-tech indoor farms — a 30-acre farm in Somerset, KY, for strawberries and cucumbers and a 15-acre farm in Berea, KY, for leafy greens. AppHarvest is shipping strawberries under the WOW Berries brand and washed and ready-to-eat leafy greens under the Queen of Greens brand. In its third growing season, the AppHarvest Morehead farm has further diversified its crop, adding snacking tomatoes sold under the Sunset brand as Flavor Bombs and Sugar Bombs. Morehead began its harvesting this season ahead of schedule.

According to USDA reports, the value of U.S. fruit and vegetable imports rose to a record level in 2021 and has been projected to keep increasing in 2022. Changing weather patterns — ranging from mega-drought in the Southwest of the U.S. to more frequent flooding to catastrophic wind events — are making it harder than ever for open-field farmers to predict the duration of their growing seasons and to have conditions that result in a quality harvest. Major food retailers have demonstrated increasing interest in high-tech indoor farms for their ability to de-risk fruit and vegetable production with a more climate-resilient, more sustainable year-round growing solution that uses far fewer resources. Europe, a pioneer in the industry, is estimated to have nearly 520,000 acres of CEA production compared to an estimated 6,000 acres in the United States.