Farmland Partners, the listed US real estate investment trust (REIT), increased its dividend last week to $0.464 a share as its portfolio of farm properties grew. The dividend should only increase from here, according to chief executive Paul Pittman; REITs are required to distribute 90 percent of profits.
“We have ramped up our portfolio very rapidly so have plenty of cash flow to increase the dividend,” he told Agri Investor. “This is especially so because we don’t need to build internally with each transaction due to our buy-and-lease model; we are growing the asset base and rent revenue but not our cost structure.”
The REIT is set to close $46 million of acquisitions in December, as announced earlier this month.
The fall in land prices across the Corn Belt in the US (by as much as 2 percent year-on-year, according to a recent report from Chicago Fed) did not concern Pittman.
“Rents are sticky in both directions; they don’t go up or down as fast as land so unless we see a sustained declined in value, it is unlikely rents will correct downward,” he said. “Also – our current stock price is trading so far below the asset value of the farms that investors have already priced in a substantial decline in farmland values.”
Farmland Partners made an initial public offering at $14 in April and is currently trading at $10.95. The management announced a share buyback scheme at the end of October to help support a higher share price, although it is unclear if the buyback has started.