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Farmland Partners forecasts soaring income, despite rental softness

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Farmland Partners forecast a more-than-doubling in its rental income this year, fuelled by its expansion into one of the top US farmland owners, and despite some softening in rental yields.

The group - unveiling a 241% surge in rental income for 2015 to $9.6m - forecast takings rising further this year to hit $21.3m.

The forecast increase reflects the boost to the Farmland Partners portfolio from an acquisition drive which has continued into 2016, with the company two weeks ago finalising its biggest purchase yet – the $197m acquisition of 118 farms, spread over 22,100 acres, in the Corn Belt state of Illinois.

Including a further 8,600 acres in deals that have yet to close, the group's portfolio has expanded to 108,000 acres – up some 100,000 acres since when it listed two years ago.

The group has "continued a growth trajectory that we believe has made us one of the largest landowners in the US", said Paul Pittman, the Farmland Partners chief executive.

Rental rates

The impact of the increase in area swamped some small easing evident in the rental rates, which for the group's same-property portfolio eased by $3 an acre to $357 an acre last year.

Farmland Partners added that it "can provide no assurances that crop yields and prices will reach expected levels or that the company will obtain the rents it anticipates".

The group forecasts that land with variable rental rates will yield about $1.8bn this year, "which is management's estimate based on the historical productivity of those farms and regional crop price projections".

Earnings rise

The comments came as the group reported adjusted funds from operations, its preferred earnings measure, up sixfold to $1.95m for the October-to-December quarter.

Rental income for the quarter tripled to $4.68m, from $1.44m a year before, far outpacing a 59% increase to $2.32m in operating expenses.

On a per-share basis, the adjusted funds from operations came in at $0.12, up from $0.04 a year ago, and bang in line with market expectations.

Farmland Partners shares stood 0.4% lower at $10.69 in morning deals in New York.

By Agrimoney.com

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