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Girotto: Losing China as a Trade Partner Is the Biggest Farmland Risk
“The biggest concern certainly is that in some way through this whole thing with China, that China would truly go away as an agricultural trading partner somehow. I think that's probably the biggest overall risk. The other macro risks that I mentioned around in…”
Girotto: Farmland Opportunity Avoids Illinois, Indiana, and Ohio for Lack of Value
“And core U.S. Farmland stretches further afield in that way into Illinois, Indiana, Ohio. We don't go there because we don't see any relative value in terms of the farmland there, and we don't have the inside connections.”
Girotto: Palouse farmland yields double US wheat average at 40% premium
“Produces twice the US average. So US average wheat yields around 46, 47 bushels pretty consistently. You know, you'll even see those crop insurance T yields around 85 out there. And the price of the land is only 40% higher than if you're buying wheat farms on …”
Girotto: Pricing Commingled Fund Exits Without Asset Sales Is a Huge Risk
“I'm sure it's written down in the private placement memorandum, but unless you're actually selling assets in order to determine those exit and entry prices, that's a huge risk.”
Girotto: Mid-Teen Return Projections for Farmland Are Unrealistic
“There are people in space to talk about at least mid teen returns, right on farmland. That's just not reality. We talk about high single digits in terms of returns”
Girotto: Manager bonuses steer endowments away from long-term assets like farmland
“I think a lot of that disconnect comes by creating financial incentives, you know, bonuses and things like that for the investment manager that actually steer them away from things that the client should actually be investing in. And I see that often in farmla…”
Girotto: Farmland Values Dropped Only 4% in the 2008 Financial Crisis
“In the financial crisis, overall USDA, US farmland values went down about four percent. There was no interruption of the annual cash revenue streams that were coming out, so basically it was flat zero. Because it's the only asset class along with cash that did…”
Girotto: Farmland Opportunity rejects farms behind Missouri or Mississippi levees
“We don't buy farms even if they're cheap, and it's the greatest farm in the world, and it sits behind a levee on either the Missouri or the Mississippi River.”
Girotto: Cash accounting makes farmer income statements unreliable for financial due diligence
“Well, you know, farming is one of the last cash accounting businesses in America, right? And so it is very easy for a farmer to look profitable or unprofitable depending on what it is they want to talk about that day, whether it's taxes or renting a new farm.”
Girotto Achieves 4% Net Cash Yields via Value-Add Farmland Acquisitions
“Our historic returns actually are at four percent because we are buying at a discount to the market rate, as well as we're using an operator that's getting 20% higher crop yields and can pay more in terms of cash rents. So our underwriting number is net of fee…”
Farmland Opportunity takes no carry on land appreciation or farm sales
“There is no carry on the actual sale of the farm, and there's no carry at some artificial Based on a third party mark to market that no one can believe, right? We do a mark to market on a yearly basis. Every three to four years, there's an external third party…”
Girotto: Northern Minnesota Shifts from Barley to Higher-Yielding Corn-Soybean Rotations
“We were there because of the long-term global warming trend that we see, and that's traditionally been a small grains world, like barley, sometimes soybeans, and it's with the different shorter duration hybrids for things like corn, You're able to actually get…”
Girotto: Institutional farmland entry will price out the Palouse arbitrage
“And so we think that that's a long term arbitrage that will get priced out as more and more professional investors or investors get into buying farmland.”
Girotto: Deflationary economic environment would be very bad for farmland
“One is that the United States or may globally gets into a deflationary environment. That'd be very bad for farmland.”
Girotto: High inflation with high interest rates works well for farmland
“If you do have a high inflationary environment with high interest rates, that works well for Farman. That's the 19 seventies for Farman.”
Girotto: Deploying $250M in Farmland Yearly Requires Paying Market Prices
“But if somebody showed up and said, I want to buy two hundred fifty million dollars of farmland this year, the only way to do that would be to get large transactions and pay market prices to even attempt to do that even if you could execute it.”
Girotto: Buying farmland as perceived individuals yields discounts public REITs lose
“We're buying for what is perceived as an individual or an individual entity rather than buying for a fund or a publicly traded REIT or anything along those lines. And we think that that gives us a great advantage or our clients a great advantage in order to ge…”
Girotto: Best Farmland Exits Pit Rival Farmers Against 1031 Exchange Buyers
“The exit is you want to be selling in a market that Farm incomes are flush and commodity prices are high is what you want to wait for, especially if you have the ability to wait for that. And then you want to do a public auction. You want to get the local farm…”
Girotto: Iowa farmland remains fragmented among over 3,000 owners per county
“So you'll even go into a state like Iowa now, you know, has 99 counties. One of those counties will have around 300,000 acres of tillable or plantable farmland. And look in the plat book, which is basically the phone directory for land, and in there you'll fin…”
Girotto: US cropland average cash yield is around 3%
“So it's in the low threes, three percent today. So if you look at just the USDA average cropland rental rate in the US divided by average cropland value, it's come down to about three percent.”
Girotto: Farmland Opportunity charges 20% fee on gross farm revenue
“Our management fee, we basically take 20% of the gross revenue off of the farm. So that's Any lease revenue, that's primarily farming, but it could be windmills and, you know, various other things. So our gross cash yield rates are around five percent. So we'r…”
Girotto: Farmland historically appreciates 6% annually from inflation and yield gains
“Historically, that has been around six percent. Half of that is inflation. This is a Very good inflation hedge. Soybeans go into like 3000 products, including the pen you're holding right there. I mean, it goes into everything. It is an inflation hedge, tracks…”
Girotto: Farm incomes dropped 50% after 2013 market peak
“So the commodities markets, as well as the land market, peaked basically in Q-two of 20 13. Since then, we've seen farm incomes come down by about 50%.”
Girotto: US exports 10% of corn versus 50% of soybeans
“The US corn market is mostly domestic. It's only about 10% exported, but the soybean market is almost 50% exported.”
Girotto: Over 80% of Target Farmland Is Purchased by Farmers
“80% plus of the land are bought by farmers. We don't see a lot of competition from other farmland investment funds.”
Girotto: Institutional Farmland Ownership Is a Rounding Error in $2T Market
“The size of the market is about two trillion in farmland value in the U.S., and there are two publicly traded REITs in the space, and they each own around or less than a billion in farmland. Your largest institutional investor is TIA Cref in the US. They own m…”