Wall Street is buying up agricultural real estate

Agricultural real estate investment trusts "are the new buyers on the block, unlocking potentially billions of dollars of cash to the rural real estate market," Marcia Zarley Taylor reports for DTN The Progressive Farmer. Paul Pittman, CEO of Farmland Partners, told Taylor, "We're permanent, we're stable and we want to bring investment capital into U.S. agriculture. Farmers who find themselves in a little financial difficulty the next few years will look at us as their friend."

Farmland Partners "launched its initial public offering in April raising $53 million, seeded with the $100 million of farm real estate Pittman has been accumulating since 1996," Taylor writes. "It was the first REIT to specialize in row-crop real estate. By mid-year, FPI owned 41 farms with 23,630 acres in Illinois, Nebraska and Colorado, along with three grain storage facilities. It had five farms under contract in Arkansas, Louisiana and Nebraska totaling another 4,075 acres."

But "the farm community has mixed opinions about outsider interest in farm ownership," Taylor writes. "Some states even maintain anti-corporate farm ownership laws on the books although few have enforced those provisions since a Nebraska Supreme Court ruled its version unconstitutional almost a decade ago. On the other hand, fast-growing farmers like to partner with REITs as a way to expand their operations on someone else's dime. They see it as a way to lock in rental land."

"After the run up in commodity prices from 2006-2012, 'there's a whole wave of money from strange places headed to agriculture, including outside investors,' says David Freshwater, a University of Kentucky ag economist," Taylor writes. (Read more)