Six percent capitalization rate on a mature almond block and the water costs are not in the expense load.

What district, because Westlands and Tulare Lake run very different numbers even in the same county.

The water exclusion you caught is the most common structural problem in permanent-crop pro formas in the San Joaquin, and you've mapped it correctly. The 1.8-point spread between the marketed cap and the actual cap is not a rounding issue, it is a category error in the expense load.

The assumption doing the most work in the reversion math is that the future buyer's cap rate stays at or below your entry cap. You've assumed 5.5 percent on stressed NOI, which is defensible, but the scenario that gets people is when stressed NOI and cap rate expansion arrive simultaneously. If water delivery rises another $180 per acre and the exit cap moves to 6.0 percent on that lower income, the reversion loss compounds from two directions at once. The broker's pro forma will not model that scenario because the buyer never asks for it.

The risk this thread doesn't name is tree age and replant liability. A mature almond block in the San Joaquin is probably 15 to 25 years into its productive life. Replant cost runs $10,000 to $15,000 per acre depending on rootstock, irrigation retrofit, and the gap years before the block returns to yield. On 160 acres that is a $1.6 to $2.4 million contingent liability sitting below the purchase price. If the seller knows the block is five years from transition and the buyer is modeling a stabilized 4.3 cap without a replant reserve, the price is structurally wrong before water cost moves at all.

On water cost specifically, the groundwater replenishment fees tied to SGMA implementation have been less predictable than surface delivery charges, and the trajectory in overdraft basins has been upward. Confirm the specific subbasin's GSP with the local groundwater sustainability agency in writing before you close, not from the broker's summary.

What is the tree age on this block, and does the seller's disclosure include a soil and root health assessment?

The 4.3 cap is the right number to work from, and the reversion risk you outlined is real, but there is a third layer that does not show up in cap rate math at all: almond prices themselves have been under pressure since 2022 oversupply, so the gross revenue line the broker anchored is probably optimistic on both the income and the expense side simultaneously. A stressed NOI built on $0.90 to $1.00 per pound handler price instead of $1.15 to $1.20 changes your actual yield before water costs even move. Are the expense schedules you are reviewing using actual water billings from the district or an operator estimate, because those two numbers can differ by 30 percent on a block that had a light delivery year during the underwriting window?