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Des Moines, IA, United States, 2012/02/29 - The Farmland Marketing and Management Group says, a number of contributing factors could create a flood of individually structured farmland partnerships into the alternative investment market.
According to Tracy Lynn Bolton, Founder of Farmland Marketing And Management Group, Inc., "We have farmers contacting us from all over the United States looking at selling their operations.”
Bolton and her staff knew this day would come and over the last 4 years, as a result of her firms marketing efforts, she has inventoried an impressive list of individual investors, institutions, university endowments and others all looking to participate in farmland investment opportunities.
“Our research indicated that a generation of farmers would be approaching retirement age and that there would probably be a lot of farmland for sale. We knew that a growing world population, a global food crisis, an emerging bio-fuels industry and a diminishing supply of productive farmland would most likely increase the income, appreciation and value of the farmland making for a nice investment. It actually turned out better than we could have imagined.” says Bolton
From an investment or investor perspective; the world debt crisis, continued economic uncertainty and market volatility have created an environment that makes many investors wary of more traditional investments, creating interest in alternative investments.
Sounds like a perfect situation, farmers looking to get out and investors looking to buy farmland but Bolton points out that,“Despite all the farmland acquisitions made by non-farm investors over the last half of a century the majority of farmland in this country is still owned by farm families and a large portion of what is sold, is sold to other farmers. “While there is the strong temptation to sell, I think many of these farmers are informed enough and have been around long enough to know that their land will continue to rise at an aggressive pace.” states Bolton.
“If someone were to come up with an alternative to an outright sale that was more attractive and profitable for farmers you might very well see much of this countries farmland available to investors. Farmland that might otherwise never be available to a non-farm investor.”
In fact, that is precisely what Bolton and her associates have been working toward for the last 4 years.
“Our firm designs simple, inexpensive limited partnerships that give farmers the liquidity they need and want, minimizes capital gains taxes and allows a farmer to continue participating in the future income and appreciation of the land all without going into debt or losing control or possession of their farms.”
The sheer number of farmers looking to retire coupled with the investment community’s thirst for alternative investments could create a “windfall” of these partnerships entering the marketplace. “This would be unprecedented!” Bolton points out “There isn’t a lot of farmland for sale, relatively speaking. I think we are going to be bringing a lot of these investors and farmers together in our individually structured partnerships.”
Bolton says,“We encourage our farm clients to move slowly and take a pencil to any offer to sell outright, consider what they are actually getting net of expenses and taxes. Perhaps more importantly, where are they going to invest that money where it will be as safe as owning ground? We ask them if they have another investment in their present portfolio that has produced income or appreciation like their farmland. We also get information about what land in their area has sold for in the past to calculate a historical record of appreciation and show them what they stand to lose in future appreciation if they sell outright. We are confirming with factual information and real numbers what they already know to be true in their hearts and that is—they shouldn’t be selling.” says Bolton.
“I know this is a smarter way to do it.” assures Bolton.
“The difference between a farmer selling outright now, versus a structured sale over a 5 to 7 year period through the Farmland Marketing and Management Group can mean tens of thousands, hundreds of thousands or even millions of extra dollars in the farmer’s pocket.”
“I know it’s a safer, smarter approach for investors too; most agricultural real estate investment funds being structured right now or those structured in the last few years have little in the way of proven track records and can, to some degree be categorized as, blind pool offerings (the investor has no information about the particular farm being acquired prior to investing) which can be dangerous.
Bolton’s individually structured partnerships allow small investors to invest in smaller properties with inexpensive partnership interests and move their way up. For the large investor, whether that is a wealthy individual or a university endowment with a large amount of money to invest, they can buy ALL the available partnership interests in a particular partnership or invest in different partnerships in various sizes in different geographic areas. It allows for absolute flexibility and diversification without the expense or responsibility of owning an entire farm and they have detailed information about the property and owner prior to investing.
According to Bolton,“I think it is a social responsible way to invest in farmland that will give a lot of farm families an option they never had before.”
It is the Mission of The Farmland Marketing Group (farmlandmarketinggroup.com) to educate farmers and potential investors about the benefits of becoming part of what will be the world's first publicly-traded consolidation of independent grain producers.