American Farmland Investments, a retail-focused agri investment firm, has raised just under $1 million for its latest farmland partnership. The partnership of 18 investors will acquire farmland in Louisiana from farmers in need of capital.
The seven year buy-and-lease investment scheme appealed to high net worth and wealthy US citizens that invested a minimum of $27,750 each, according to Dawn Fiala, director of sales and marketing at the firm.
The seven-year investment will produce returns on cash rent of 4.85 percent a year and Fiala has high hopes for the land value increase over the life of the investment; the firm’s first farmland partnership in Oklahoma doubled in value, she added.
American Farmland charges a one-off fee of 5.6 percent on each commitment and owns a 10 percent stake in the partnership.
The firm has a wealth of farmers lining up to sell their properties to investors with the hope that they can buy them back after a seven-year period once they have improved their balance sheets, according to Fiala. This capital need enables American Farmland to buy the properties at a lower rate than the market, although the farmers have to buy it back at the market rate.
“Finding land to buy is not difficult,” she said.
American Farmland aims to launch two partnerships each year.