Thursday, July 24, 2014

Real Estate Investment Trusts Down On The Farm: Farmland Partners Looks to Buy $100 Million Worth of Land (FPI; LAND)

Gladstone Land is the other publicly traded vehicle. There a a few private partnerships that let in outsiders.
In February 2011 I noted:
...We've been following this trend for the last three years and have been asked when will it top?
One sign will be when Optima Fund Management brings their American Farmland Company public, still a few years away....
Optima have not yet made the move, and have been correct to keep the cash flow and cap gains to themselves but I have a feeling we are getting close.
From Agrimoney:

Farmland Partners has sights on $100m of farmland
Farmland Partners revealed a $100m shopping list of US farms as its unveiled plans to raise cash from a further share sale, only three months after raising some $50m at its stockmarket flotation.
The farmland investment group said its staff had "identified, and are in various stages of reviewing" more than 10 potential farm purchases, covering a total of 20,000 acres, and with an estimated aggregate price of $100m.
"We have engaged in preliminary discussions with some of the owners and commenced the due diligence process on certain of these farms," the group said.
However, it said that it did not expect to seal a deal until the completion of an offering of 3.71m shares, with the option to underwriters to sell a further 557,620.
That would make the offering larger, in share terms, than the group's initial public offering of 3.80m shares completed in April, at which it raised $48.0m, net of costs.
It forecast net proceeds of $54.4m from the latest offer, assuming underwriters exercise the opportunity to sell the extra shares.
Although that sums falls well short of the price needed to acquire all the land in its sights, Farmland Partners said that it was to borrow a further $30.0m from state-backed Farmer Mac Mortgage Securities, and had extra firepower from selling partnership interests.
This scheme allows farmland owners to defer the crystallisation of capital gains on land sales.
'Economies of scale'
Farmland Partners has announced four farm acquisitions since its April flotation, taking its portfolio from 7,300 acres to nearly 25,000 acres, and expanding out of Midwest row crop land....