Denver, CO based Pure Cycle Corporation PCYO announced that it has entered into an agreement to sell its entire farm holdings along the Fort Lyon Canal. The company will sell its 14,600 acre holding to Arkansas River Farms LLC, an affiliate of C&A Companies and Resource Land Holdings LLC., for $53 million.
Pure Cycle had leased its farm holdings to nearly 80 tenant farmers in the area under both cash and crop share leases, for which the company expected to earn an annual farm income of $1 million in 2015. The company has however decided to exit this agricultural business to concentrate on its water operations.
Pure Cycle expects to develop its water and related infrastructure in Denver along with its Sky Ranch property, which has nearly 828 acre feet of groundwater. Recently, the company completed the WISE Project, which interconnects water systems among 13 Denver area water providers to enable regional water supply projects.
Water and wastewater infrastructure across the U.S. has deteriorated due to wear and tear and the need of the hour is to upgrade the system. Recent U.S. government studies have estimated costs of $500 billion to $800 billion over the next 20 years for maintaining and improving the existing inventory, building new infrastructure, and meeting new water quality standards.
U.S. water utilities like Aqua America Inc. WTR, American Water Works Company, Inc. AWK and Connecticut Water Service Inc. CTWS are investing substantially to modernize their outmoded infrastructure. However, the water utility space in the country is quite fragmented which we believe is holding back both funding as well as development.
Pure Cycle Corporation currently has a Zacks Rank 3 (Hold).
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