The central idea behind the American Farmland Company was to accumulate and then to lease farmland. The founders noted that U.S. farmland property values generally increase over the long term while having lower than historical debt to equity and debt to asset ratios. They have also risen during both increasing and decreasing interest rate environments. This historical perspective is expected to increase in the future as well.
With less debt, farmland has been and may be more resistant to interest rate changes, credit shocks and financial recessions. And more specifically and timely, during the financial crisis of 2008, the NCREIF Farmland Index generated robust gross cumulative gains while the S&P 500 Index and the MSCI World Index generated substantial losses. Since inception the company has maintained this consistent, institutional business strategy, and in its implementation they have adhered to four core principles: (i) diversification, (ii) high quality standards, (iii) a value added approach and (iv) risk management. In maintenance of these four core principles the company expects to continue to acquire additional high quality properties.
American Farmland Company, a real estate company, owns and operates a portfolio of farmlands in the United States. The company operates through four segments: Permanent Crop, Specialty/Vegetable Row Crop, Commodity Row Crop, and Development. The Permanent Crop segment consists of Kimberly Vineyard, Golden Eagle Ranch, Quail Run Vineyard, Blue Heron Farms, and Falcon Farms properties with an aggregate of 3,069 tillable acres and 3,882 gross acres. The Specialty/Vegetable Row Crop segment includes Sandpiper Ranch and Sweetwater Farm properties with an aggregate of 1,608 tillable acres and 1,808 gross acres. The Commodity Row Crop segment comprises Pleasant Plains, Macomb Farm, Kane County Farms, and Tillar Farms with an aggregate of 4,446 tillable acres and 4,726 gross acres. The Development segment consists of Blue Cypress Farm, Roadrunner Ranch, Condor Ranch, Grassy Island Groves, Pintail Vineyards, and Hawk Creek Ranch properties, with an aggregate of 3,487 tillable acres and 4,962 gross acres. The company leases its farms to professional farmer tenants under various lease structures with staggered durations, including fixed and participating leases. The trust qualifies as a real estate investment trust for federal income tax purposes. American Farmland Company was founded in 2009 and is based in New York, New York.
(Summary) (Company) (Chart)
27 December 2015
1yr Target $9.50
Payout Ratio %
1yr Cap Gain 34.37%
1yr Tot Return 37.90%
EPS (ttm) $0.05
EPS next yr $0.28
EPS next 5yr N/A
1yr Price Support N/A
Market Cap $142.46 Mil
Revenues $9.40 Mil
Earnings $0.60 Mil
Profit Margin 6.38%
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American Farmland Company was founded in October by a team of investment professionals across the agriculture, real estate, and alternative investment industries: Optima Fund Management, Harrison LeFrak, Alfonso and J. Pepe Fanjul of Florida Crystals Corporation, and William von Mueffling of Cantillon Asset Management.
The Company acquired an almond orchard, a second parcel to our strawberry farm, a Chardonnay/Pinot Noir vineyard and a citrus development in Florida. Additionally, the Company formally elected status as a Real Estate Investment Trust, and subsequently paid its first dividend to shareholders in December.
AFCO acquired three new development properties to be converted into a mixed vegetable farm in Florida and a pistachio orchard and vineyard in California. A fully mature walnut orchard was also added to the Company’s growing portfolio.
The Company hired Robert L. Cowan as President and CIO, who complemented and strengthened the existing team with his 30 years of experience in diversified farmland investment, acquisition and management. Acquisitions included a pecan orchard in Georgia and Alabama and second parcels expanding previously purchased properties.
Important Company Assets
Investments in real estate as of September 30, 2015 and December 31, 2014 are comprised of the following:
The Company has the following properties as of September 30, 2015 and December 31, 2014:
Anyone who reads any of the articles I've written over the years knows that I have an affinity toward companies that invest in farmland and timberland. I believe these investments are obviously great investments if bought at a reasonable price.
The real value in this type of investment is in the inherent value of the land itself. I believe that the land will grow in value by 6-8% per year and hence so will the value of the company. But that's not the only value. Farmland needs to be farmed and companies like American Farmland Company will benefit from the annual lease payments made by farmers to the company usually in the vicinity of 2-3%. Together this is a nice stream of income. While farmland prices often increase in relation to commodity prices, I expect this investment to increase at an average of 10-12% per year.
My intention is to begin accumulating shares in American Farmland very soon (probably this week). Like other companies I intend to start out with a small position and then grow that position over time through dividend reinvestment and additional buys at opportune times.