Farmland Partners flagged “strong” buyer interest in the US agricultural land market, contrasting with downbeat findings of a survey of lenders, as it unveiled its biggest land buying spree yet, taking its portfolio above 35,000 acres.
The land investment group said it faced “strong competition in farmland markets” from farmers themselves – contrasting with findings by a Creighton University survey released overnight of the worst market conditions since at least 2005.
Farmland Partners earlier this week said that agricultural land has not, on records kept by real estate agents’ group Ncreif since 1992, seen a year with negative total returns – ie appreciation plus rental income.
“Contrary to speculative negative reports by the press, farmland prices are still increasing in most of the US,” the group said, citing data from the US Department of Agriculture and the Federal Reserve.
Extra funding firepower
Farmland Partners on Friday unveiled the purchase of eight farms, in separate deals, totalling $25m, taking above $80m the sum it has spent since its flotation in April.
With the farms – in Arkansas in the southern US and Nebraska in the central Plains – comprising 6,080 acres, the deals average out at $4,100 per acre, above the average price of some $2,600 an acre it had paid before the announcement of the latest deals.
And the group, which in July said it had its sights on $110m of farmland, hinted at a continued appetite for acquisitions, unveiling an increase of $45m to $75m in a borrowing facility with the Federal Agricultural Mortgage Corporation, better known as Farmer Mac, the federally chartered ag lender.
Furthermore, the group unveiled the pricing at 2.35% of a $5.46m, three-year interest-only bond, under the Farmer Mac facility.
Paul Pittman, the Farmland Partners chief executive, said that the extra borrowing capacity with Farmer Mac “gives us greater access to debt financing at very attractive terms”.
Shares in Farmland Partners stood 0.8% higher at $9.5999 in morning deals in New York.