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Land Investment Monthly – September 2014

The Land Investment Monthly is a round-up of articles and headlines published by the farm press, business media and financial publications with insights into buying, selling or investing in farmland, recreational ground or development ground. Follow Steve Bruere @SBruere on Twitter and find Peoples Company on Facebook for the latest land listings, auction results, upcoming events and real estate news. Subscribe to my monthly updates or request access to a hard copy of my Land Investor newsletter by sending an email to Steve@PeoplesCompany.com and including “Land Investment Monthly” in the subject line.

Ripe Midwest Cornfield

Iowa Values
The Iowa Chapter of REALTORS® Land Institute has announced the results of the 2014 Land Trends and Values Survey, in which farmland specialists and others are asked to share opinions regarding the current status Iowa farmland market. Cropland values decreased by a statewide average of 3.4 percent for the March 2014 to September 2014 period, and according to the surveys the statewide average is down 8.8 percent on a year-over-year basis from September 2013. Estimates are for bare, unimproved land with a sale price on a cash basis.
Read more.

Land Web
The www.LandInvestmentExpo.com website has been updated with a new theme and fresh content that is reflective of the upcoming Eighth Annual event to be presented by Peoples Company in West Des Moines. The Expo, scheduled for January 23, will feature keynote speaker Dennis Gartman of The Gartmann Letter, as well as the return of both Simon Atkins, a climate Economist and Commodity Yield Expert, and reappearance of Susan Payne, an executive with Emvest Agricultural Corp. in Africa. Eric O’Keefe, editor of The Land Report, will also share a keynote presentation in 2015. Registration is open. Save the date and explore the new website today.
Read more.

Excess Cash
There is a ton of money out there, land is an inflation hedge, balance sheets are strong, and things are different than the 1980s. These are some of the points that are made when the topic of land values are discussed today. With the prospect of selling corn for less than $3/bushel out of the field this fall, the coffee shop conversations have turned from record high land sales or staggering cash rents to the discussion of no sales at farm auctions and what will the reduction in land rents be. The big question is how far will the liquidity in agriculture go, and what will the appetite of investors be moving forward?
Read more.

Farm Back
A new program established by the Community Foundation of Greater Des Moines, allowing land donors to continue to receive rent income or crop proceeds during their lifetimes, also ensures that the land continues to be farmed and at the same time gives donors an opportunity to maintain a voice in how the land is managed – and by whom –both while they’re alive and after they’re gone. The Des Moines Register reports that farmers participating in the Keep Iowa Growing program can receive tax breaks and state tax credits of up to 25 percent of the value of the gift.
Read more.

African Ag
Veteran ag reporter Ken Root is teaming up with analyst Maurice Clark to tour farming operations in South Africa, Zambia and Mozambique. The fall trip is being underwritten by Peoples Company, and is intended to explore farming practices and potential for investment opportunities in these arable African regions. Root and Clark, who are knowledgeable in farming techniques, mechanization, and assessment of investment risk, will visit farms owned by Susan Payne, Executive Chairman and CEO of EmVest Asset Management. Root plans to deliver a report of the trip on Agribusiness Radio Network and Agribusiness Report on WHO-TV, during and immediately following his trip. Initial observations will be posted on the Land Investment Expo website, as well as Peoples Company’s blog and social media properties (Facebook, Twitter, YouTube, LinkedIn). Payne, who will return in January to Iowa to speak for a third time at the Land Investment Expo, will share an illustrated overview of the trip with presentation slides that include photos or video of what is captured October 6-13.
Read more.

Simple Math
With a focus on supply and demand in the face of exploding worldwide populations to feed, The Sovereign Investment Daily reports on the importance of not over-complicating one’s approach or failing to set up “substantial future gains” by not considering how dwindling acres of earth’s crop-producing land relates to a portfolio. Since the 1940s, the U.S. has seen nearly 20 percent of its farmland go by the wayside. In lieu of getting too caught up on the latest SEC fillings or price-to-earnings, the editors suggest doing the simple math as the price-per-acre on farmland is set to eventually “go a whole lot higher.”
Read more.

Prime Time
Julie Koeninger in her “Farmland Investment Primer” white paper published in July by GMO LLC, covers the characteristics of and potential risks associated with farmland investing. Uncorrelated with financial asset returns, Koeninger writes, farmland offers “genuine portfolio diversification for institutional investors” and is an asset class that has not only strong investment fundamentals, but also boasts potential for “attractive cash yields. Land management, investment vehicles, and the fundamentals of supply and demand are each covered in this comprehensive summary with notes on a cross-regional approach and “targeted farmland investment in certain regions.”
Read more.

Posted in Cash Rents, Headlines, In The News, Land Expo, Land Investing, Land Values, Upcoming Events | Tagged , , , , , , , , | Leave a comment

Iowans to Tour Farms in South African region Oct. 6-13; Gauge Investment Potential

CLIVE, Iowa – A group of Iowans will assess the outlook for agricultural investments in Africa on a weeklong fact-finding tour next month to farms in South Africa, Zambia and Mozambique.

The delegation headed by noted ag journalist Ken Root and analyst Maurice Clark will tour properties managed by EmVest Agricultural Corp., a Pretoria, South Africa-based ag fund involved in growing, processing and distributing various commodities across five countries in sub-Saharan Africa. Participants in the Peoples Company Africa Tour organized by ag real estate specialists Peoples Company will view farming practices in this emerging market firsthand on Oct. 6-13.

Home audiences can get their own view of the region through the lenses of farming techniques and mechanization as well as investment risk assessment through reports during and after the trip. Root and a videographer aim to document farming practices, culture, government regulations and overall land productivity as presented by EmVest farm managers.

Reports from the field will be posted on the Twitter, Facebook and YouTube accounts of Peoples Company, on its website and blog. Root also plans to air updates on the Iowa Agribusiness Radio Network and on the Agribusiness Report during newscasts on WHO-TV, Des Moines, and KCRG-TV in Cedar Rapids. A thorough perspective will be a feature of the eighth annual Land Investment Expo presented by Peoples Company on Jan. 23 at the Sheraton Hotel West Des Moines.

The seed for this fact-finding tour was planted in a Land Expo keynote by EmVest CEO Susan Payne at the fourth annual event in 2011, said Peoples Company President Steve Bruere. Payne’s initial talk on agriculture’s role in food security to communities, regions and countries was well received by the Land Expo audience and earned her a repeat invitation in 2013, when she termed opportunities in Africa “the highest impact investment you can make.”

Payne also commented that she likes coming to Iowa because it’s the agricultural heartland of America and she operates from the agricultural heartland of Africa.

Through repeat visits to the Land Investment Expo in 2011 and 2013, “Susan opened everyone’s eyes as far agriculture in Africa,” Bruere said. “A lot of people now view Africa as the final frontier for agricultural production in the world.”

“What’s very intriguing to me about what Africa can offer is not only as a producer but also as a supplier. With a growing population of hungry people in the region, it’s a domestic market play for investors. This Iowa delegation will be seeing the ability to produce and helping to understand what’s going on with the economy and other factors land investors must look at.”

This year’s update on African agriculture should fit nicely with keynote presentations by other experts already confirmed for January’s 2015 Land Investment Expo, Bruere added. Influential investor Dennis Gartman, who keeps a close eye on Brazilian soybeans, corn and cotton in his role as editor and publisher of The Gartman Letter as well as frequent contributor on CNBC and Bloomberg TV, will discuss commodities and capital markets. Eric O’Keefe, editor of The Land Report, the magazine of the American landowner, also will appear as a keynote speaker.

More information about the 2015 Land Investment Expo is available at www.LandInvestmentExpo.com or by phoning 855-800-LAND (5263).

Note to editors:

Headshots of EmVest Agricultural Corp. Executive Chairman Susan Payne and agricultural journalist Ken Root are available at:

Payne http://email.altstudios.com/pr/peoples/susan-payne.jpg

Root http://email.altstudios.com/pr/peoples/ken-root.jpg

Peoples Company Africa Tour logo highlighting location of South Africa-Zambia-Mozambique region is available at: http://email.altstudios.com/pr/peoples/pc-africa-tour.jpg

About Peoples Company
Peoples Company is a leading provider of ag real estate brokerage, land management, appraisal and investing services in the Midwest. It provides a range of services, including aggressive marketing strategies employed in its innovative approach to land brokerage and land auctions, as well as land management, appraisals and land investing. Its annual Land Expo attracts 600-plus attendees with keynotes by some of the biggest names in land investing and ownership. See more at www.LandInvestmentExpo.com. Peoples Company is licensed to sell real estate in Iowa, Nebraska, Missouri, Minnesota, Montana, North Dakota, South Dakota and Illinois. For more information, visit www.PeoplesCompany.com or call (855) 800-5263.

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There is a Ton of Money out There!

Thoughts on the outlook for land values, farm profits, and little comparison to the 1980s.

There is a ton of money out there, land is an inflation hedge, balance sheets are strong, and things are different now than they were in the eighties. These are some of the points that are made when the topic of land values comes up today.

With the prospect of selling corn for less than $3/bushel out of the field this fall, the coffee shop conversations have turned from record-high land sales or staggering cash rents to the discussion of “no sales” at farm auctions and what will the reduction in land rents will be.

You don’t have to look very hard to find a farmer who terminated his or her farm lease, or banker capping out operating lines for cash rents exceeding $300/acre. I have grown up in production agriculture. And until this year, I’ve never seen a farmer terminate their lease. It’s always the landowner seeking a better opportunity. For the first time in my career, I will experience a reduction in cash rents. Something that’s not been seen since the eighties.

Though things in production agriculture have turned from bullish to bearish in a short period of time, there doesn’t seem to be a consensus on where land values are headed. Similar to any market looking for direction, there’s going to be greater volatility and wider range of outcomes until that direction is established.

There are examples of soft land sales, yet you can find an equal number of strong sales that rival the record prices of 2012 and 2013. This trend continues to be driven by the fact that farmland purchases aren’t always economically driven. With record farm profits, historically low interest rates, and a lack of alternative investments, farmland continues to be the investment of choice for farmers and many investors.

Furthermore, unlike a house or commercial building, farmland often trades generationally, which means the time to buy is when a successor generation finally decides to sell. Given the record profits in production agriculture, if a piece of land comes up for sale next to your farming operation, the attitude has typically been to buy even beyond what makes economic sense.

In other businesses, this is called a “blue sky” investment and value placed on the business above its obvious economic return. Unfortunately, your neighbor was also operating on the same philosophy. To put it simply, today’s land values aren’t supported by today’s economics but rather the record profits of those in production agriculture.

In fact, farmers have represented nearly 80 percent of all land purchased over the past three years, as investors have by and large been sitting on the sidelines. We all recognize changes on the horizon. At the same time, there is still hope that the commodity market will bounce back and business will continue as usual.  While that is my hope as well, I’m not as optimistic as some. The wealth creation that we have experienced over the past five years has been staggering. In 2008, the average price of Iowa farmland was $4,468/acre. In 2013 the average price had nearly doubled to $8,716/acre, resulting in a market cap of $255 billion for Iowa farmland, or $120 billion in new wealth over that five-year period.

So, where were we in 2008 and where are we at today? In 2008, the price of corn averaged $4.78/bushel and the 10-year treasury was at 3.66 percent. Corn averaged $5.96/bushel in 2011, $6.67/bushel in 2012, and $6.22/bushel in 2013. The 10-year treasury bottomed out at 1.80 percent in 2012, the same year the price of corn peaked – creating a perfect storm for land values – and not surprisingly creating the peak in the land market in 2013.

What’s the difference between today and 2008? Unfortunately, not so much. Balance sheets are certainly stronger coming off of three years of record profits, and interest rates are nearly 1 percent lower than they were in 2008. But that’s about it.

On the bearish side, commodity prices are at levels comparable to 2007, when farmland values averaged $3,908/acre. The general consensus is that there is a ton of money out there, meaning land values won’t likely fall as much as they potentially could. And though I agree with that statement in some cases, I don’t think it will be the case consistently.

For example, if you were willing to accept a 3.5 percent cap rate on $400 rent in 2012, that means you’d be equally as willing to pay $11,428/acre for a piece of land. Given the high demand for land in 2012, cap rates decreased to 3.5 percent as farmers and investors competed to own land. Now that the frothiness is out of the market, I expect not only cash rents to decline but cap rates to increase, as well.

If cap rates were to increase to 4 percent and $400 rent is reduced to $350, then this would translate into $8,750/acre, and a 25% decrease in land values.

What will ultimately prevail? Are we headed back to 2008 where farmland values were nearly 50 percent off of today’s levels? Will values decline by 25 percent per the example I outlined above? Or will the statement that “there is a ton of money out there” trump the economics and preserve current land values?

For many investors, land is being purchased as an inflation hedge. Not only has land inflated since 2008, so has almost every other asset class. This begs the question of what will land values do in an inflationary environment? Would an inflationary environment cause land to inflate further, or will inflation trigger higher interest rates and ultimately a reduction in land values?

I’m certainly not making a prediction. The liquidity that is in the ag economy will continue to prop values up in many cases. In other cases, where neighbors aren’t driving values with blue sky bids – and it’s purely economically driven – sale values should come down.

The big question is how far will the liquidity in agriculture go, and what will the appetite of investors be moving forward?

I agree with the statement that there is a ton of money. But I do not believe that money will overpay for land consistently and, ultimately, land values need to reconcile with the economics of current commodity prices and interest rates. What I can’t get my hands around is how land will perform in an inflationary market and is there so much money in the system in general that land will continue to inflate as investors look for a place to store cash.

Posted in Cash Rents, Headlines, In The News, Land Investing, Land Values | Tagged , , , , , , , , | 1 Comment

Land Report Editor Eric O’Keefe to Deliver 2015 Land Expo Presentation

Steve Bruere, left, with T. Boone Pickens and Eric O'Keefe at the 2014 Land Expo in West Des Moines.

As editor of The Land Report – The Magazine of the American Landowner – Eric O’Keefe’s opinions and insights on land and landowners have been featured in The New York Times, The Wall Street Journal, and Investor’s Business Daily.

The Rice University graduate is a licensed Texas broker. He has written for dozens of publications, published numerous books, and has had a screenplay turned into a $15 million feature-length film. Over the course of his career he has interviewed a Who’s Who in America, including T. Boone Pickens, Clint Eastwood, Francis Ford Coppola, Hank Aaron, Jay Leno, Julia Child, Nolan Ryan, Ted Turner, Tom Selleck, Tommy Lee Jones, and Willie Nelson.

O’Keefe will appear at a keynote presenter during the 2015 Land Investment Expo presented by Peoples Company in West Des Moines, Iowa. The Land Report’s Fall 2014 “Land to Table” issues is online and available to view at www.LandReport.com. Follow the Land Expo on Twitter, and save the date for January 23, and visit our website to register today.

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Land Institute Announces Results of September 2014 Trends and Values Survey

September 17, 2014 – The Iowa Chapter of REALTORS® Land Institute is pleased to announce the results of our September 2014 Land Trends and Values Survey. Our REALTORS® Land Institute Chapter is an affiliate of the National Association of REALTORS® and is organized for REALTORS® who specialize in farm and land sales, management, development and appraisal.

Participants in the survey are specialists in farmland, and are asked for their opinions about the current status of the Iowa farmland market. Participants were asked to estimate the average value of farmland as of September 1, 2014. These estimates are for bare, unimproved land with a sale price on a cash basis. Pasture and timberland values were also requested as supplemental information.

The results of these surveys show a statewide average decrease of cropland values of -3.4% for the March 2014 to September 2014 period. Combining this decrease with the -5.4% decrease reported in March 2014 indicates a statewide average decrease of -8.8% for the year from September 1, 2013 to September 1, 2014.

The nine Iowa crop reporting districts showed a mixed response. The districts varied from a 3.1% increase in SE district to a -6.5% decrease in NE district since March 2014. Factors contributing to current farmland values include: lower commodity prices, increasing interest rates. Other factors include: lack of stable alternative investments, cash on hand, and limited amount of land on market.


The Iowa Farm & Land REALTORS® farmland value survey has been conducted in March and September since 1978. This survey plus the RLI Farm and Ranch Multiple Listing Service are activities of REALTORS® specializing in agricultural land brokerage on a daily basis.

SOURCE: THE REALTORS LAND INSTITUTE, IOWA CHAPTER #2

MEDEA CONTACT: Kyle J. Hansen, ALC – 515-382-1500

www.rlifarmandranch.com

 

Posted in Headlines, In The News, Land Appraisal, Land Investing, Land Management, Land Values | Tagged , , , , | Leave a comment

Documented Trip to Explore Farming Practices in Arable Regions of Africa

Well-known ag reporter Ken Root will lead a delegation traveling in October from Iowa to South Africa, Zambia and Mozambique, on a trip underwritten by Peoples Company and intended to explore farming practices in the arable region through the eyes of American analysts.

Red Tractor on African LandRoot and analyst Maurice Clark, who are knowledgeable in farming techniques, mechanization, and assessment of investment risk, will visit farms owned by Susan Payne, Executive Chairman and CEO of EmVest Asset Management. They will document the farming practices, culture, government regulations and overall productivity of the land as shown by Payne and her farm managers.

Root also plans to deliver a comprehensive report of the trip on Agribusiness Radio Network and Agribusiness Report on WHO-TV, both during and immediately following his trip, and will post several of the delegation’s initial observations on the Peoples Company blog website and Facebook page.

Payne, who will return to Iowa to speak for a third time at the Land Investment Expo in January, will share an illustrated overview with presentation slides that include photos or video of what is captured during the October 6-13 tour.

Root, who documented the early development of agriculture in China and Brazil while following their growth over the past four decades, has emceed the Land Expo each year since its inception in 2008. Clark has an extensive financial and government service background.

Be sure to follow Peoples Company for more near-real-time updates on the Africa tour and 2015 Land Expo streaming at www.Twitter.com/PeoplesCompany.

Posted in Headlines, In The News, Land Expo, Land Investing, Upcoming Events | Tagged , , , , , , | Leave a comment

How Wind Towers Impact Land Values

As the giant wind towers continue to multiply across the Iowa landscape, the question we at Peoples Company are frequently being asked is, “How do the towers impact land values.” Like any investment, different buyers have varying opinions, comfort levels and valuations. In this article we will look at various methods for valuing a wind easement agreement.

Wind TowersBarely 10 years ago the large wind towers being built across Iowa were a tremendous curiosity. We gawked at the turbine blades being transported on our highways and bus tours traveled to see dozens of towers dotted across a few miles of farmland. Today, as the towers multiply across the Iowa landscape and we barely take a second glance at them as we travel, landowners continue to debate the pros and cons of having these wind towers on their land. Obviously, many land owners believe the pros outweigh the cons and towers continue to get built.

The initial decision to enter into a wind tower easement is generally a quick cost-benefit analysis by the landowner – does the annual payment compensate for the loss of productive acres and the “hassle-factor” of farming around the tower and access lane? In addition, a landowner considers how the presence of a tower will impact the value of the farm if or when it is sold. This is the question we are often asked when listing or auctioning a farm, and our appraisers must consider when establishing an appraised value.

Chart 1 is an example of the value impact of adding a wind tower easement to an 80 acre farm. In this example, we have an 80-acre farm with 77 tillable acres. The tillable acres are valued at $9,000 for a total farm value of $693,000, or $8,663 per total acre. The addition of the tower and the access lane reduces the tillable acres from 77 to 75. The value of the tillable acres are reduced $100/acre due to the decrease in farmability. This is totally a judgment call, and different buyers will have differing opinions about this adjustment. Also, there will be a different impact if the access and tower are along the property line or in the middle of the farm.

Chart 1

Wind Tower
 
Without
 
With
Total Acres
80
80
Tillable Acres
77
75
X Price Per Tillable Acre
$9,000
$8,900
= Total Value Farmland
$693,000
$667,500
 
 
 
Wind Tower Income-Yr
-
$5,000
divided by Cap Rate
-
8%
= Wind Tower Value
-
$62,500
 
 
 
 
Total Farm Value 

$693,000
$730,000
Value per Total Acre
$8,663
$9,125
Value Increase Per Acre
-
$463
Value Increase %
-
5.34%

The next step is to place a value on the income stream generated from the wind easement agreement. In Chart 1 the assumption is an annual payment of $5,000 and a cap rate of 8 percent. This results in a wind agreement value of $62,500 and a total value per acre increase from $8,663 to $9,125; $463/total acre or 5.34 percent. I have spoken with an investor buyer that uses a cap rate similar to the rate they use on the cash rent income (approximately 5 percent) if the agreement is with a financially strong developer/utility. So in this example a 5 percent cap rate would increase the wind agreement value to $100,000.

Chart 2 is a matrix using three different valuation methods with three variations of each method. The Cap Rate method is common in determining the value of income-producing real estate. It is calculated taking the annual income divided by chosen cap rate. The Price: Earnings method is a common measure in stock valuations. P:E ratios for publicly traded utilities are commonly in the range of 15 to 20, so take the annual income times the chosen ratio to get the indicated price. The third method is a calculation of the Net Present Value of the entire future income stream discounted at three different discount rates. Chart 2 shows that the value of the example agreement is generally between $50,000 and $100,000. The final value will be determined from the buyers set of assumptions based on their return target and evaluation of risk.

Chart 2

Wind Tower Income-Yr
 
$5,000
 
Total Value
Cap Rate
5%
$100,000
 
8%
$62,500
 
10%
$50,000
Price Earnings Ratio
12
$60,000
 
15
$75,000
 
20
$100,000
Net Present Value
8%
$72,062
(2%-Yr Income Increase)
10%
$58,052
 
12%
$48,106

There are several important contract terms that need to be well understood in order to adequately and appropriately evaluate the risk associated with the agreement. A few of the important terms include:

  • Counter party risk
  • Is the contract with a well established public utility or an unknown start-up?
  • Real estate taxes
  • Are property taxes associated with the wind tower assets addressed in the contract?
  • Reclamation
  • What happens at the end of the contract?
  • Annual adjustments
  • Does the contract provide for annual increases in the easement payments?
  • Crop damage
  • Are potential crop damage adequately addressed?
  • Compaction/topsoil/tile
  • How are the issues of compaction, topsoil and tile addressed?
  • Liability Insurance
  • Is the counter party responsible for liability insurance?

Wind towers are more and more common and are generally accepted as value-added assets. The key to determining the value is an in-depth analysis of the terms of the agreement. Legal advice should be sought from an attorney familiar with these agreements before finalizing a contract.

Ron Beach is part of the Land Investment Programs division at Peoples Company where he works with farmers wanting a source of capital to purchase land they can then lease, and with numerous capital sources wanting to invest in farmland. Ron may be reached at (712) 579-2587 or Ron@PeoplesCompany.com.

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Planning a Future Farm Legacy

Planning the legacy of a family’s agricultural real estate typically raises an array of legal and financial questions by landowners and heirs considering the future use of their land.

The sheer quantity of Midwest farm ground up for some type of transition in ownership in coming decades is Tractor ploughing a fieldstaggering. In Iowa alone – with a farmland market cap of about $260 billion – nearly 50 percent of this is anticipated to change hands during the next 20 years.

Getting a head start on mapping out the future of one’s land often involves a need for creative solutions coupled with the ability to bring together multiple stakeholders, including kin with varying degrees of interest in or expectations for a family’s estate or succession plan.

Peoples Company Land Agent Matt Adams recently sat down with Jared Schmidt of Ankeny, Iowa-based Farm Financial Strategies, Inc. to explore synergies between their respective occupations. The conversation turned to considering viable options for older generations of landowners working with the next to prepare in advance for future life-changing events.

From having enough of and the right type of life insurance – to considering the respective positions of farming children and non-farming heirs as they could relate the transition of land ownership – Schmidt and Adams touched on the role advisors play in facilitating crucial conversations and getting each stakeholder on the same page.

Mediation can be especially important for families that have both farming heirs and non-farming heirs as it puts relationships on equal footing. Schmidt and Adams, who as part of their respective trades each maintain professional relationships with local lenders, accountants, land agents, attorneys and CPAs, say working with the right team also goes along way in terms of helping to navigate potentially difficult and highly emotional terrain.

“How we structure things with decision makers today helps establish clear direction for what happens down the road,” Schmidt says. “There is lot of education involved with a little trial and error to put together what works for each family. Who is going to farm or manage the property? Or make future improvements to the land? If a family has one farming child and three non-farm heirs, how do we avoid less-than-favorable outcomes for one set or the other at some point in the future?”

Adams says laying out all the options and providing information without obligation to help people decide on the right thing to do drives his career as a real estate professional with Peoples Company – a diversified land company offering land investing, land brokerage and land management services in eight states.

“Our whole deal is to take more of asset-management approach with a focus on land brokerage and land management to facilitate creative options and determine how assets will be transferred,” Adams says. “One route may be for the landowner to use investor capital and buy out non-farming heirs – allowing that farming heir to keep those acres in his or her operation – through a sale-lease back deal, or by purchasing shares of stock for a farm that’s held in a corporation. We will talk about what the landowner wants to accomplish, and which vehicles are available to take them there. It could be as simple as retaining a land manager to act as a referee during annual meetings, to tenant negotiations and helping to negotiate an equitable farm lease.”

Schmidt, who has more than 12 years experience in the financial services industry, all under the masthead of “Farm Legacy by Design” with Farm Financial Strategies, says clients have presented him with “plans” written down on napkins before. Yet it’s the actual putting of a plan in place, he says, that helps to ensure all family members are treated fairly throughout the entire process. Schmidt and Adams agree that it is important for landowners and heirs to consider what can be done or undone, too, in terms of ownership. Land in a trust, for example, may be an irrevocable situation and leave no way out.

Walking through a few dry runs also helps each decision-maker understand what the plan actually looks like.

“There are multiple vehicles to there, and you can make a lot of scenarios work,” Schmidt says. “Our goal is to try and meet with family and formulate a plan before a life-changing event occurs. We work it through together and help to put everybody’s eyes on the same problem to make sure there is nothing conflicted; get everyone’s perspective to create a single solution that achieves everyone’s goals.”

“We are all aware that that there will be a lot of transition in ownership over the next 20 to 50 years,” Adams says. “But the biggest issue is that people aren’t preparing in advance of a life-changing event that occurs. Our goal is to foster improved communication among families and the professionals who can help meet those needs.”

Jared may be reached at (855) 302-FARM (3276), or by emailing Schmidt@FarmEstate.com. Contact Matt via email at Matt@PeoplesCompany.com, or dial (515) 423-9235.

Posted in Estate Planning, Headlines, In The News, Land Investing, Land Management | Tagged , , , , , , , , , , | Leave a comment

Land Investment Monthly – August 2014

The Land Investment Monthly is a round-up of articles and headlines published by the farm press, business media and financial publications with insights into buying, selling or investing in farmland, recreational ground or development ground. Follow Steve Bruere @SBruere on Twitter and find Peoples Company on Facebook for the latest land listings, auction results, upcoming events and real estate news. To subscribe to my monthly updates via email, send a message to Steve@PeoplesCompany.com with “Land Investment Monthly” in the subject line.

Nice and Steady
The past decade’s “roller coaster” of primary agricultural markets won’t be so shaky during the next 10-years of growth, according to a statement in July by U.N.’s Food and Agriculture Organization (FAO) and the OECD. The next decade will bring more stability, Reuters reports, as crop prices decline during a “correction period” and then even out at levels above those experienced in 2008.
Read more.

Summer Farmland Survey
The value of U.S. farmland rose about 8.1 percent in the past year, according to the results of an annual USDA study with 11,000 parcels surveyed during the first two weeks of June. Prices in the Corn Belt remain the highest, and Iowa led the Midwest with an average farmland price at $8,750 an acre, an increase of 9.4 percent since 2013. Reuters reports that the northern Plains saw the biggest jump in overall real estate values.
Read more.

Ripening Investment Class
Two Florida sugar barons, the founder of a multibillion-dollar investment firm and a New York real estate dynasty are among investors who’ve acquired 11,000 tillable acres of agricultural real estate with the help of a former hedge fund manager. Crop yields and cash rents are on the mind of this bunch, according to The New York Times DealBook. Sourcing Preqin, The Times reports that hedge funds now have $14 billion invested in farmland.
Read more.

Diverse Produce
Despite lower expectations for farm incomes in 2014, the Wall Street Journal reports on benefits of investing in income-producing land. A hedge against inflation and an opportunity to diversify with agricultural real estate are now drawing greater interest from individual investors, as new institutional funds crop up around timber.
Read more.

Cash Update
An updated analysis of how average Iowa farmland ranks compared to investing in the S&P 500 Index has been published by retired Iowa State University Economist Mike Duffy. He concludes that from 1950 to 2013, the agricultural real estate asset class would have been a better investment in all of those 63 years with the exception of 1978 to 1984. Another source forDTN/The Progressive Farmer’s article says that the “relative riskiness of farmland looks quite attractive.” Executive Editor Marcia Zarley Taylor notes that “time also has a way of correcting mistakes and this can benefit buy-and-hold farmland owners over day traders.”
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Tipping Point?
A new report by the Rabobank Food & Agribusiness Research and Advisory (FAR) group suggest that U.S. land values have responded to fundamental drivers in the marketplace, and do not currently represent an asset bubble. Falling commodity prices and some softening in demand following a 12-year run up in steep annual value increases, however, may indicate that the long-term growth pattern needs to change to avoid the development of a bubble.
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Practically Farming
A proactive approach to conservation-minded practices is the topic of Land Agent Megan Hunt’s overview of nutrient-reduction strategies, and a combination of techniques utilized by the Peoples Company Land Management team when considering how to help Iowa achieve both its clean water and farm profitability goals.
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Posted in Cash Rents, Headlines, In The News, Land Investing, Land Management, Land Values, Natural Lands | Tagged , , , | Leave a comment

Q2 2014: Des Moines Metro Housing Snapshot

The Des Moines Metro Market Snapshot is a quarterly report featuring inventories of new construction and existing single-family homes in the 18 communities I track for Peoples Company. My reports cover the residential housing data and statistics presented during the Annual Builder & Developer Luncheon, and provide updates on the Des Moines-area market throughout the year.

Kalen Ludwig, REALTORHome sales have remained steady in Greater Des Moines Area over the last 12 months with the strength of both market and consumer confidence growing more resolute than at any time in recent years as interest rates remain low for buyers!

New construction home sales, both pending and sold, were relatively flat on a year-over-year basis. Foreclosures are down to the pre-crisis levels of 2005-2006, and owners are finding renewed equity in their homes as prices have continued to rise through 2013 and 2014. This allows for the option of upgrading with an investment in an existing home or new construction home.

Both locally and nationally, what we’re seeing is the quick soaring of home prices taper off to a slower appreciation. This helps keep the price of homes affordable while staving off the threat of another housing bubble. Though the total number of homes sold in the Des Moines-area was down slightly in the 12 months ending June 30, compared with the prior year, it’s been a promising first half and sellers were excited to see their houses appreciating in 2013 and 2014. Prices aren’t as explosive as we saw last year, but interest rates remain low and this combination promotes a healthy market.

Overall, the stability of the housing market is better than it has been in years.

Current Market Snapshot – Des Moines Metro Area

 
As of July
2014
As of July 
2013
Total Active
2,629
2,743
New Construction Active
427
628
Total Pending
1,682
1,425
New Construction Pending
374
340
Total SOLD
7,138
7,589
New Construction SOLD
1,250
1,206
Total Months Supply
4.4
4.3
New Construction Months Supply
4.1
6.3

*Sold includes single-family homes sold in the last 12 months.

Homebuilding activity remains strong in the Des Moines-area with options available for buyers in the market to find a lot, floor plan, and builder that match their needs and style. Inventories have continued to stay flat through this year, encouraging buyers who’re not finding what they want or what they need in the purchase of an existing home or new construction spec home to consider a built-to-order or custom new construction as a viable option.

Many buyers are finding a lot, floor plan and builder that fit their distinctive needs and unique style, which is my specialty as a Certified New Construction Sales Professional. The 2014 Home Show Expo, presented three weekends in July by the Home Builders Association of Greater Des Moines, featured projects by 11 great builders who presented their unique styles in the $500,000 to $950,000 price range in the Ridge at Echo Valley in Norwalk.

Two-thousand-and-fourteen was the first year that I represented a builder in the Home Show Expo, and it was an amazing experience to invite more than 12,000 attendees to tour our home. We very much appreciated a chance to meet everyone who stopped by!

Find more information on my listing of the Ground Breaker Homes Prairie Setter II at www.GroundBreakerHomes.com, and by watching a video tour of the home. Or you can start by checking out the many lots and building sites on our website at www.PeoplesCompany.com, or email me directly at Kalen@PeoplesCompany.com for more information.

-Kalen Ludwig

I am a Residential REALTOR® and Certified New Construction Sales Professional who specializes in helping homebuyers locate a suitable lot, secure a qualified builder, and pick a perfect floor plan to match their unique tastes or personal style. The ability to listen and understand the needs of her clients allows me to offer appropriate feedback and credible data that help sellers and buyers make informed decisions regarding real estate transactions. Follow me on Facebook, Twitter and LinkedIn.

Posted in Headlines, In The News, New Construction, Residential Real Estate | Tagged , , , , , | Leave a comment