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Farmland Partners makes fourth US land purchase

Farmland Partners unveiled its fourth purchase of US land in two months, taking its portfolio to some 25,000 acres and gaining a foothold in a fourth state, furthering aims to diversify its holdings.

The group said it had agreed to purchase for $4.6m in cash a 1,250-acre row crop Arkansas farm which will, like the company's other holdings, be leased out, for a yield expected to exceed 5% a year.

The deal took above 18,000 acres the area of land that Farmland Partners has bought since it listed in New York in April, raising $53m to support its portfolio expansion.

And it takes the group into a fifth state, on top of Colorado, Illinois, Kansas and Nebraska, progressing a drive by the group to spread geographic, and crop, risk.

'Diversify our portfolio'

"This transaction is expected to diversify our portfolio both in terms of region and crop type," said Paul Pittman, the Farmland Partners chief executive.

"Continued diversification of our farmland portfolio and of our tenant base is a cornerstone of our expansion strategy."

He added that the Mississippi Delta, which includes Arkansas, "is a strong agricultural region and we anticipate doing more transactions in the area".

Arkansas, besides growing corn and soybeans, is the third-ranked US cotton producing state and major grower of rice and sorghum too, besides ranking fifth in softwood timber production and, in the protein sector, second in US broiler output.

'Attractive opportunities'

Farmland Partners when it listed said it intended to buy farmland "in agricultural markets outside our existing markets to mitigate the risks associated with concentrating our portfolio in a limited number of agricultural markets".

While highlighting the prospects for corn and soybean land, the group said that "global demand for staples such as rice and cotton also will provide attractive opportunities to acquire farmland in areas such as the south eastern US and Texas".

Mr Pittman's appetite for investing in US farmland was whetted by a return of 18.5% a year he gained on a 340-acre farm he bought in Illinois in 2006 for $1.30m, equivalent to about $3,890 per acre.

"After determining that he could realise a significant profit and return on his investment, Mr Pittman sold the farm on February 23, 2012 for $3,188,745, or approximately $9,550 per acre," the group said.

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