Shonda Warner: Farmland Investing Is Here To Stay Mike Norman, anchor, HardAssetsInvestor.com (Norman): Hi everybody, and welcome to HardAssetsInvestor.com. I’m Mike Norman, your host. Well, what about farmland as an investment? We’re going to talk about that today with my guest, Shonda Warner, who is the managing director of Chess Ag Full Harvest Partners. I hope I got that right. Shonda Warner, Managing Director, Chess Ag Full Harvest Partners (Warner): That’s correct. Norman: Thank you very much for coming on the show. So, farmland? It kind of makes a lot of sense if you think about the last several years. We got a tremendous boom in agricultural commodity prices. And you know, we’ve heard people talk about, “Hey farmland’s a great investment; let’s go into it.” But you’ve put together an actual fund that does just that. Tell me about it. Warner: Correct. Well, the fund itself is a limited partnership. And under that limited partnership there’s a private REIT, which is quite a tax-efficient way to own farmland. And there’s some hedging companies and holding companies to deal with other assets that don’t neatly fit into the REIT structure.Norman: So you go out, you actually buy farmland. This is all around the United States.Warner: All around the United States. Norman: Then what? You lease it out to farmers, to produce crops on that land? Warner: Yes. Norman: And the investors receive a cash flow? Warner: Yes, they do, every year, a coupon. They clip a coupon just like a bond. Norman: How does that compare, let’s say, relative to, currently, stocks or bonds? Well, bonds, it must, because it’s like zero percent...
Link to full article here Old MacDonald had a farm … and it worth’s more today than ever before. That’s definitely a boon for Old MacDonald, but it might pose a risk for investors who are just now thinking about putting money into farmland, experts say. “I think investors have become a little too bullish about farmland,” says Justin Gardner, assistant professor of agribusiness at Middle Tennessee State University. “Right now, commodity prices are high, and that means that farmland values are also high. Investors would be paying a premium for farmland.” Investors generate a total return on farmland from two sources: the revenue the land produces – either through rental payments from farmer tenants or crops – and appreciation of the underlying farmland. Farmland is an asset class that is not directly correlated to stocks and bonds, and fans say it is significantly less volatile and even offers a currency hedge as foreign countries choose to import American crops because the value of the dollar makes them cheaper. Of course, farmland is an illiquid investment. Investors can gain exposure to the asset class by purchasing farmland directly or investing in farmland-based funds. They can also invest in mutual funds and ETFs that invest in commodities such as corn, soybeans and wheat, but, in doing so, investors will not get the benefit of land price appreciation. Farmland values have surged over the last decade due to a combination of high commodity prices and low interest rates. At the same time, demand for leased farmland has driven up rental rates, which makes farmland more valuable overall. Consider this: From 2000...
Betting the farm As world population expands, the demand for arable land should soar. At least that’s what George Soros, Lord Rothschild, and other investors believe. By Brian O’Keefe, senior editor (Fortune) — On a sunny Friday morning, Shonda Warner and I are in her red Toyota pickup heading southwest on Highway 61 out of Clarksdale, Miss., on our way to see one of her farms. While her black standard poodle, Walter, naps in the back seat, she’s explaining the pitfalls of being an institutional land investor. “It’s really hard to buy property at the right price,” says Warner as we roll past the famous crossroads where Robert Johnson is said to have sold his soul to the devil to get the secret of the blues. “Half of all farmland that trades in the United States never sees a broker. We believe you’ve got to have a lot of local knowledge of the marketplace. Farmers are smart and they talk. And if one Town Car full of Wall Street types rolls into town and makes a bid, suddenly all of the prices go up.” A Nebraska farm girl who went on to a globetrotting career as a derivatives trader for Goldman Sachs (GS, Fortune 500) and then as a hedge fund executive in London, Warner, 45, is back on the farm pursuing what she believes is a huge moneymaking opportunity. Two years ago Warner launched an investment firm, called Chess Ag Full Harvest Partners, with a fairly simple underlying strategy: Buy undervalued farmland in the U.S. and profit from the coming global agriculture boom. Last June she closed her...
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