# Farmland Partners



## Vol (Jul 5, 2009)

Acquire more ground.

Regards, Mike

http://www.agweb.com/article/farmland-partners-to-buy-22300-acres-in-illinois-naa-mike-walsten/


----------



## swmnhay (Jun 13, 2008)

Well I hope with lower commodity prices it bites them in the ass.


----------



## steve IN (Jan 13, 2010)

Sounds like what Prudential was trying to do back in the 70's. Wasn't there a group in Illinois who went broke a few years ago with this same philosophy? Then just to the North of me in Michigan we had Stamp farms. Which much to everyone"s surprise this loser is still farming rented ground while his wife, father in law , brother in law and I believe some hired men are up on charges of Bankruptcy fraud. Our community is also "blessed " to have Cerres Group in our midst also. Seems everyone with cash knows more about farming than farmers. Hate to see grain prices tank even lower but sometimes we need a cleansing. If you had children in school during a lice scare sometimes you had to shave a few heads to get rid of the lice


----------



## swmnhay (Jun 13, 2008)

steve IN said:


> Sounds like what Prudential was trying to do back in the 70's. Wasn't there a group in Illinois who went broke a few years ago with this same philosophy? Then just to the North of me in Michigan we had Stamp farms. Which much to everyone"s surprise this loser is still farming rented ground while his wife, father in law , brother in law and I believe some hired men are up on charges of Bankruptcy fraud. Our community is also "blessed " to have Cerres Group in our midst also. Seems everyone with cash knows more about farming than farmers. Hate to see grain prices tank even lower but sometimes we need a cleansing. If you had children in school during a lice scare sometimes you had to shave a few heads to get rid of the lice


Illinois Family Farms was the one in Illonois that made NEWS a few yrs ago.Those pd some extreme high rents to get most of the ground.This one is buying ground to rent out a little different twist to it.So they want top dollar for rent.


----------



## rjmoses (Apr 4, 2010)

They must be using the new math that is being taught in schools nowadays.

Using old math, let's say, just for nice round numbers, that they gross $200/acre either through direct income or rental. Now subtract maybe $20/year property taxes, another $30/year for income taxes and other expenses. This leaves maybe $150/year as net income. $150 into $8,800 means about a 60 year payback or putting it another way, about a 1.7% ROI--at best! I think I'd rather put my money under the mattress.

The worst part of this is the assumption that prices of grains will be the same or better and that land values will increase.'

Just my thinking.

Ralph


----------



## rjmoses (Apr 4, 2010)

The more I think about this, the more I wonder. 100,000 acres at maybe $8,000/acre is $800,000,000--a fair piece of change.

This causes me to wonder what the "smart" money knows that I don't? Smart money doesn't make dumb investments (most of the time), especially of this size. And getting a ROI of 1-2% over 40-60 years isn't smart.

A 100,000 acres is a relatively large chunk of land, so, besides farming, what else could be done with that much land?

Just thinking......

Ralph


----------



## swmnhay (Jun 13, 2008)

rjmoses said:


> The more I think about this, the more I wonder. 100,000 acres at maybe $8,000/acre is $800,000,000--a fair piece of change.
> 
> This causes me to wonder what the "smart" money knows that I don't? Smart money doesn't make dumb investments (most of the time), especially of this size. And getting a ROI of 1-2% over 40-60 years isn't smart.
> 
> ...


I looked on their website and it looks like they are putting solar panels on some of the ground getting guberment $$.Also wind towers for more guberment $$ and renting the tillable out.I've seen some other chatter that they want extreme top $$ rent for the privlage of farming their ground.


----------



## swmnhay (Jun 13, 2008)

http://finance.yahoo.com/q?s=FPI

Interesting.They only lost $638,000 last yr.2014

Top two guys salary was $549,000 last yr.


----------



## rjmoses (Apr 4, 2010)

Government $$'s. Now, that makes sense. Probably a lot of political connections (Naahh, not in Illinois!) that get them windmill and solar $$. After all, Obama gave some $500 million to that California company, Solyndra.

There's a couple of big wind farms in the Peoria area and I wonder if this outfit is involved. Leasing the land for wind farms, get government dollars, then farming the surrounding ground, makes good business sense in terms of asset utilization.

But....they've only been a public corp since 2013. I've seen a lot of these outfits go belly up about 2-3 years down the road.

FPI's latest quarterly SEC report: http://quote.morningstar.com/stock-filing/Quarterly-Report/2015/9/30/t.aspx?t=:FPI&ft=10-Q&d=54f36233e156e11c184088d0021dde55

Ralph


----------



## glasswrongsize (Sep 15, 2015)

If they only plan on servicing the principal, a 200 dollar net profit would service the loan. These people are smart enough to also account for the declining buying power of the dollar&#8230;
If the inflation rate is above the interest rate, they are making money.
Say they make enough money off of the land to service the loan for 30 years. Their profit would be the difference between the interest rate and the inflation rate. That is not taking into consideration the other gummint toad-hides they plan on skipping town with.
I'm sure my thoughts are full of holes, but I think we all agree they at least have a PLAN that indicates a profit somewhere. People don't plan to fail, they fail to plan.
73, Mark


----------



## swmnhay (Jun 13, 2008)

glasswrongsize said:


> If they only plan on servicing the principal, a 200 dollar net profit would service the loan. These people are smart enough to also account for the declining buying power of the dollar&#8230;
> If the inflation rate is above the interest rate, they are making money.
> Say they make enough money off of the land to service the loan for 30 years. Their profit would be the difference between the interest rate and the inflation rate. That is not taking into consideration the other gummint toad-hides they plan on skipping town with.
> I'm sure my thoughts are full of holes, but I think we all agree they at least have a PLAN that indicates a profit somewhere. People don't plan to fail, they fail to plan.
> 73, Mark


what if they have 200 loss per acre?

what if land values drop by 50%?

IMO.Their plan is to make money but if it fails they walk away and everyone else gets burnt.


----------



## glasswrongsize (Sep 15, 2015)

I agree with you, I was just spit-balling and attempting to see their angle of attack. I could almost guarantee there are dreams of sugar plums and gummint money dancing in their heads. If that is the case, then whether money is made or not, "everyone else gets hurt" because gummint money is taken from "everyone else" and given to the chosen winners.

I was more speculating that they could be hedging against and betting for inflation. IE (according to a buying power calculator) 8000 of today's dollars in would have be equal to 3,640 of 1985's dollars.
Another way to think of it, if you put 8000 dollars under your pillow in 1985 and did not allow it to work for you along the way, that same 8000 dollars would have .45% of its original buying power.

73, Mark


----------



## glasswrongsize (Sep 15, 2015)

More directly related to this deal, an $8,000,000 (the loan calculator would not do 800,000,000) loan with 2% interest for 30 years would have a total cost of $10,645,040.81. IF that purchase was made of a durable good that neither appreciated nor depreciated in value, and IF the buying power of a dollar depreciates at the same rate as the PAST 30 years, there would be a theoretical gain of $6,954,959.20 (but a ZERO net gain in purchase power of the money in-hand) even if there was no income along the way.
It just beats putting it a sock drawer, but someone with that kind of money would also have the smarts to legitimately or lack of morals to crookedly roll the money over more often and make more money than hedging against inflation.

Just more ponderings

73, Mark


----------



## luke strawwalker (Jul 31, 2014)

swmnhay said:


> Illinois Family Farms was the one in Illonois that made NEWS a few yrs ago.Those pd some extreme high rents to get most of the ground.This one is buying ground to rent out a little different twist to it.So they want top dollar for rent.


Yep, greed... ain't it great??

Now is a TERRIBLE time to be BUYING farmland with the idea of getting top dollar RENTS...

With crop prices in the dumper, little reason for optimism in the markets, and big harvests... Land rent costs have become disproportionate part of crop production costs, riding the wave of rising land prices...

Rents and land prices have not caught up with crop prices yet... but another year or two of dismal crop prices will definitely have an effect...

Personally, I don't have a problem with speculators of this type taking it in the shorts... They're buying up overpriced farmland with the idea that they'll collect top-dollar rents in perpetuity and make a killing...

We've got too many speculators making a killing off the farmer's work, and not enough farmer's making a decent living...

Later! OL JR


----------



## luke strawwalker (Jul 31, 2014)

rjmoses said:


> The more I think about this, the more I wonder. 100,000 acres at maybe $8,000/acre is $800,000,000--a fair piece of change.
> 
> This causes me to wonder what the "smart" money knows that I don't? Smart money doesn't make dumb investments (most of the time), especially of this size. And getting a ROI of 1-2% over 40-60 years isn't smart.
> 
> ...


Maybe some folks are looking at our economy and the world situation and figure that the economy is going to melt down, it's just a matter of time, and so they'll be better off holding land than holding worthless scrip in banks and stocks that have gone under??

Land is the only thing they're not making any more of... and long term, if things really hit the fan, owning good farmland isn't the worst thing you could do...

Maybe they're starting to think more long term rather than these short-term huge gains that most folks have gotten used to...

When it's all over with, they may be the only ones smelling like a rose... who knows...

Later! OL JR


----------



## deadmoose (Oct 30, 2011)

Hmmm. I have a 401k I have been putting money into for the past dozen or so years. IF it was 100% vested in a fund like this I would be better off.

They are gonna make money. If they pay cash, and rent covers more than taxes, they have a guaranteed return.


----------



## rjmoses (Apr 4, 2010)

luke strawwalker said:


> Maybe some folks are looking at our economy and the world situation and figure that the economy is going to melt down, it's just a matter of time, and so they'll be better off holding land than holding worthless scrip in banks and stocks that have gone under??
> 
> Land is the only thing they're not making any more of... and long term, if things really hit the fan, owning good farmland isn't the worst thing you could do...
> 
> Later! OL JR


Personally, I agree with that philosophy, and that is what I am doing.

But, my land is adjoining; theirs is scattered over at least 5 states. So.....?

Ralph


----------



## hillside hay (Feb 4, 2013)

Also we are forgetting about the future carbon based tax scheme which will pay to not use land and heavily tax worked ground.


----------

