Farmland Partners raised further its rapid growth as an
owner of US agricultural land by unveiling its second acquisition in a week,
taking its portfolio to more than 23,000 acres.
The group, which listed in New York in April, said it had
agreed to purchase a 640-acre farm in Nebraska growing corn and soybeans for about
$1.0m, equivalent to about $1,500 an acre.
The farm will be leased back to the seller at a rate of
6.25%, consistent with the Farmland Partners model of renting out its land
rather than farming it itself.
Paul Pittman, the group's chief executive, said that the deal
showed the company's "ability to create value for our stockholders, while
establishing long-term partnerships with successful farmers".
Mr Pittman is a former University of Illinois agriculture graduate
who worked as an investment banker at Merrill Lynch and Wasserstein Perella,
and for eight years in the technology sector, before returning to the farming
industry in 2008.
The deal is the latest in a series of purchases in a
shopping spree underwritten by the $53m raised from the group's initial public
offering of shares in April at $14.00 a share.
The group days after its flotation revealed the purchase of a
3,696-acre row crop farm in Colorado for $8.75m, equivalent to about $2,370 per
The land, which Farmland Partners it said would purchase backed
by mortgage financing equivalent to 40-50% of the value of the deal, will be
leased back to the seller at an annual rate of 4.63%.
And Farmland Partners last week agreed to pay $12.5m for
12,500 acres of corn and soybean land on the Colorado-Kansas border, which it
expects to lease to the current tenants for a cash return of about 5%.
Wednesday's deal means that the group has more than tripled
the size of its portfolio since its flotation, amid a bid to exploit the demand
by farmers for rental plots.
Noting the "near-zero vacancy rate" on US farmland, the group
believes that "many farm operators will continue to compete for farmland even
during periods of decreased profitability due to the scarcity of farmland
available to rent".
"In our experience, many farm operators will aggressively
pursue rental opportunities in close proximity to their existing operations
when they arise, even when the farmer anticipates lower current returns or
While the group, in its stockmarket prospectus, acknowledged
the recent fall in US farm prices, it said it did "not expect a major long-term
reduction in farmland values, and believes any reduction in land values is
likely to be short-lived as global demand for food and row crops continues to