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By Rayk Riechmann
When life gives you troubled orange groves, squeeze profits out of the real estate underneath them.
That’s the fresh tack of legacy citrus grower Alico, Inc. (Nasdaq: ALCO), which decided in January to wind down citrus operations following the 2024-25 harvest. Due to a 73% decline in citrus production over the last 10 years, the economic viability of the business model eroded significantly. Despite investing in advanced treatment techniques, the spread of citrus greening disease and recurring hurricanes adversely impacted production efficiency. That spells big trouble for a company like ALCO, which generated 96% of its revenue from citrus operations last year.
But ALCO has found an alternative that should tantalize investors: The company seeks to monetize its vast swaths of prime Florida real estate. It owns 51,300 acres of land across 8 counties in Florida that qualify for various use cases far beyond orange groves. This asset is now the centerpiece of a three-headed business strategy focused on: near-term development properties, longer-term developmental properties, and ongoing agricultural leasing.
For 2026, ALCO has already locked in agreements with third-party citrus growers to lease out approximately 5,250 acres. This transition delivers recurring, contract-based income without the biological and high fixed-cost burden of citrus farming. Even more exciting are the firm’s high-value near-term residential development parcels which could unlock significant shareholder value, especially when considering the significant demand for affordable housing across Florida.
Via entitlement, planning, and controlled sales, ALCO plans to convert farm acreage into value for years to come. Some 5,500 acres were identified as “near-term development” plus another 7,100 acres identified as developments beyond five years. This raw land typically appreciates 2x-5x post-entitlement, delivering significant upside potential with limited investment needs. Over the next five years, ALCO could create up to $380 million in present value from its real estate portfolio.
ALCO has already slashed personnel costs dramatically. In its transition efforts, ALCO has decreased the current workforce nearly 90% from 200 to 25. The company is also sprucing up its balance sheet, with net debt dropping from $89 million to $60 million by year end as cash on hand rises to $25 million.
For investors, ALCO offers the stability of recurring revenues from agricultural leases and land-use partnerships with the upside potential of real estate development. With an announced $50 million share repurchase authorization, management underlines the internal confidence in the new business strategy and an ongoing commitment to returning cash to shareholders. Even though shares have reacted positively to the shift in strategy, we still a juicy upside as a steady cash flow rolls in.
At the helm is CEO John Kiernan, who has an extensive background both on Wall Street and as a C-suite executive. Watch his recent interview with us at Nasdaq here.
Download the full report below for more details on ALCO’s lucrative real-estate pivot.
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