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US Trust to expand farmland team

The private banking arm of BofA Merrill Lynch has a growing farm and ranchland investment business, currently with $1.1bn in AUM.

US Trust, the private banking arm of Bank of America Merrill Lynch, plans to add more staff to manage its farmland investment business, according to John Taylor, National Farm & Ranch executive in US Trust’s Specialty Asset Management group.

The hiring needs are a result of a steadily increasing volume of assets under management — the firm has $1.1 billion under management and currently has a $150 million pipeline of uncommitted capital, according to Taylor.

“We have to continue to grow to manage the increasing number of commitments we get and to improve our capacity to buy farms,” he told Agri Investor. “We are very selective about who we hire and it can often take some time.”

The firm wants to increase the number of farm and ranch managers from the 17 it currently employs; it hasn’t set a target for number of hires, but is simply looking for good candidates with a degree in an agriculture-related subject, Taylor said.

The firm’s investor base is also expanding from its high net worth individual mainstay, he added.

“We have seen increasing demand from endowments and foundations that want a sustainable income stream that can grow in value over time unlike a bond,” said Taylor.

Last year US Trust bought $85 million of farm and ranchland for investors and over the past four years has invested $250 million. The firm has accumulated 1.2 million acres of farmland and ranchland over a seven-year period.

All the leases are negotiated on a cash lease basis and renewed every three years, often changed to reflect commodity prices. US Trust aims to return 4 percent to each investor on an annual basis after fees, property taxes and insurance. The firm charges a 2 percent acquisition fee to cover due diligence on each property — it can take up to nine months to find the right farm — and an annual management fee of around 0.8 percent of gross income.