AcreTrader Completes 3 Investment Cycles with Higher-Than-Expected Returns
In the past year, AcreTrader has completed three full investment cycles with the disposition of three properties. Each disposition generated total returns for investors well above the initial projections.
We are proud to be able bring these farm investments full circle to the benefit of both the investors in each property and operators who have farmed them. It’s been great to see the inherent strengths of farmland as an asset class play out in these particular investments.
Here are quick facts on each:
Return Drivers
As the exit results of these three farms demonstrate, appreciation is typically the primary driver of returns in farmland investing. At the same time farmland can produce a consistent and attractive income based on annual operations or land leases.
Among many factors both economic and agricultural, these farms outperformed expectations due to a combination of:
- Buying well via our highly selective and thorough review process
- Effective management, e.g., negotiating flex leases where appropriate, cultivating strong farmer relationships, and seizing capital improvement opportunities
- Opportune sales timing, which involves paying close attention to changing regional and national market conditions
It’s important to note that these returns are not typical, nor are they indicative of any future results. Land markets are highly regional, and they’re always evolving.
Expected Vs. Actual Holding Periods
These opportunities came to us through our regional networks and the strong relationships we maintain with the operators and farm managers we partner with.
Our models generally anticipate hold periods of 3, 5, 10 or more years depending on the crop and investment type. Some of these dispositions occurred earlier than expected as sale opportunities emerged that proved beneficial to both our investors and the farm buyers.
If AcreTrader receives an offer that is in line with or higher than our perceived market value and will exceed return expectations, we may pursue the early exit. In the case of the Productive Iowa Row Crop Farm, for example, we were approached by the farm operator with an attractive offer.
Our Commitment
No matter the market conditions, AcreTrader is committed to thorough, conservative financial models in which any realized upside flows to the investors in each farm. Again, past performance is not a guarantee of future results.
“From early days at AcreTrader we have always had a conservative approach to the asset class, with the fundamental belief that it is always better to under-promise and over-deliver. We're proud of the early results that investors have been able to realize on our platform and will continue to work tirelessly for investors who have put their trust and confidence in our team to select and manage these opportunities to invest in land.”
Michael Iseman, Director of Operations
AcreTrader rests on transparency with investors, farmers, and all other parties at every point in the purchase, operation, and sale of a farm. In all transactions, in all market conditions, we are looking for beneficial outcomes for everyone involved.
*Supplemental Information: 1) The calculations for the preliminary IRRs shown in the images above assume that the start date of the investment was on the closing date for the land acquisition and the end date was the date the distribution of net proceeds from the real estate sale was initiated to Members. 2) A portion of the total sale proceeds have been withheld to pay taxes and fees required to dissolve the Companies. If any funds remain in the Companies’ bank accounts after all taxes and fees have been paid, each investor in each Company will receive his/her/its pro rata portion in a final distribution. 3) Final IRR calculations will be made after each Company has been dissolved and all outstanding fees and taxes have been paid. A distribution notice to Members will accompany any final distribution. 4) Note that the above IRRs were calculated solely at the entity level and may not be reflective of any individual's investment specific IRR which may differ based on factors specific to such investor's situation. 5) Note that the information above is not intended as investment advice. Past performance is no guarantee of future results. For additional risk disclosures regarding farmland investing and the risks of investing on AcreTrader, please see individual farm offering pages as well as our terms of use.
