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'Capital constraint' to put brakes on Farmland Partners' expansion

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Farmland Partners forecast a slowdown in the land acquisition spree which has seen it amass a portfolio of nearly $1bn, blaming "capital constraint", against a backdrop of a disappointing share price.

The land investment group - which floated in April 2014 with 7,000 acres, but now controls a portfolio of 154,000 acres across 17 states – said it had a "really strong pipeline" of further potential farm purchases.

The "backlog is incredible healthy", said Paul Pittman, the chief executive of Farmland Partners, which has completed nearly $370m of purchases this year, including those taken on with the acquisition of American Farmland Co (AFCO).

However, the "challenge" was finding the money for the farms.

'Capital constraint is the issue'

"We're close to fully invested in terms of the cash we have on the balance sheet," Mr Pittman told investors.

And while the group was "working hard" to secure deals using group shares instead, "we frankly, expected substantial stock price appreciation based on the AFCO acquisition… none of which we got.

"We've got plenty of pipeline. Frankly, capital constraint is really the issue," Mr Pittman said, adding that the impact was likely to be felt in terms of Farmland Partners' expansion.

"We are likely to grow somewhat less this year than we, frankly, would've hoped."

'Incredible opportunity'

The comments come against a backdrop of broadly-reported falls in US farmland values, although Mr Pittman termed the drop in prices as "very modest" in the key Midwest area.

"We're having opportunities to buy assets less expensively than we would have been able to buy them a year or two ago, but it's not very significant," he said.

Indeed, "you occasionally still see new records being set in the Midwest for land values," although he acknowledged that these "anecdotal one-offs".

Rents had "come down temporarily to some degree" too, in dollar terms, although the company was achieving slightly better rates on acquisitions than historically.

"[I] wish we had more capital to invest," Mr Pittman said, flagging "incredible opportunity out there.

"And the prices of asset values, rents and demand… will continue to be strong and the long-term."

By Jamie Day

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