A Nashville-based limited partnership has raised $7 million for a new investment fund that has purchased 2,500 acres of row crop farmland.
LandFund Partners, L.P., bought the farmland in Mississippi and Arkansas from previous owners that leased it to individual farmers. The tenant farmers will now pay LandFund rent to farm the properties.
Those deals are the first for the closed-end private equity fund, which aims to give investors access to farmland as an alternative asset in their portfolios. It’s a niche with a yield more attractive than U.S. Treasuries, and has drawn well-know investors such as billionaire George Soros.
“We’re hoping to establish a positive track record and replicate our investments thesis,” said Chris Morris, a manager with Lanfund Partners II. “We want to do more and are actively looking for more opportunities.”
John R. Farris, the president of Commonwealth Economics, a financial advisory and consulting firm with offices in Nashville and Lexington, KY., is LandFund’s senior manager. Nashville businessman David Griffin, a life-long farmland owner, is also a manager of the fund along with farm manager Billy Ussery and agriculture lawyer Robert Serio of Arkansas.
Morris declined to disclose investors or partners in the fund, but said LandFund is looking to buy more farmland nationwide, where valuations are attractive, including in Tennessee. “Delta Farmland is very attractive when you compare valuations,” Griffin added. “If you look at the acreage costs and yields per acre in the Midwest, and compare those prices to acreage costs and yields per acre in the Delta, you will find that row crop farmland in the Delta States offers you much more value for your dollar.”
In addition to a 4 percent to 5 percent yield that’s better than the 2-to-3 percent yield on U.S. government bonds, Morris said population growth, demand for protein in developing countries and overall global demand for food are among factors driving interest in farmland and food crops.
Fred Kane, vice president of land services with commercial real estate firm Cassidy Turley in Brentwood, said land along the Mississippi Delta is among best farmland in the country and prices have been steady.
He recalled having a client 2 years ago and paying $6 million for 2,000 acres in Arkansas and the sold it withing a year for 20 percent more to investors from Argentina. “It’s an attractive investment – people always need food,” Kane added. “So farmland is always going to be in demand.