Plenty lands real estate deal to secure ‘up to $1bn’ for vertical farm development, starting with strawberries

• Commercial real estate trust Realty Income has agreed to invest “up to $1 billion” towards the development of indoor farm space for vertical farming startup Plenty.
• Realty Income will acquire and provide development funding for properties Plenty will then lease and turn into vertical farms, according to a press release.
• The partnership’s initial transaction will be for a Plenty multi-farm facility near Richmond, Virginia.

Why it matters:

For vertical farming startups like Plenty, which aim to grow millions of pounds of leafy greens annually, the costs of building a vertical farm — never mind running it — quickly add up. Facilities are expensive just to construct, and there are all sorts of additional issues to tackle like zoning laws and other municipal regulations.

Through its new partnership, Plenty can hand off some of that real estate cost and management to Realty Income. At the same time, investing in the vertical farming space is a potential growth opportunity for Realty Income.

In a statement, Plenty CEO Arama Kukutai called the deal “an advancement in the way indoor farming assets are capitalized” and said it paved the way for vertical farms as an asset class.

Kukutai also noted that this deal speeds up Plenty’s timeline for adding new facilities.

“Scale is a critical component of advancing indoor farming’s role as a core contributor to our global food supply. Teaming up with Realty Income is a significant step forward in accelerating the deployment of our farms with vertical farm facilities that are purpose-built to support Plenty’s proprietary growing technology.”

Plenty announced in January that it was closing its South San Francisco R&D facility as it shifted focus towards the buildout of its Compton, California farm. The company also operates an R&D facility in Wyoming.

The Virginia location will be Plenty’s first facility on the Eastern side of the US. As a “multi-farm” campus, it will house several different initiatives. The first of these is a vertical farm for growing strawberries in partnership with major berry supplier Driscoll’s. 

Plenty raised $400 million in Series E funding last year from Walmart, Softbank Vision Fund 1 and others. Earlier this year, it received a $20 million grant from Wyoming to put towards the R&D facility in that state.