Paul Pittman, chairman, president and CEO of Farmland Partners Inc. (NYSE: FPI), joined REIT.com for a CEO Spotlight video interview at REITWorld 2014: NAREIT’s Annual Convention for All Things REIT at the Atlanta Marriott Marquis.
Farmland Partners invests in primary row crop farmland throughout North America. The substantial majority of the farms in the current portfolio are devoted to primary crops such as corn, soybeans and wheat. Farmland became a publicly traded company earlier this year.
Pittman explained that the company’s investment proposition is based on the fact that global grain demand is projected to increase by 45 percent between now and 2050. At the same time, the supply of land available for farming is only projected to rise by 4 percent, Pittman said: “That fundamental difference between supply and demand is what’s going to drive farmland values higher over the coming decades.”
Pittman also discussed the unique nature of a farmland REIT.
“This is the first time that someone’s had an opportunity to invest in farmland in the form of a public security,” he noted.
Production agriculture is one of the leading industries in the country, according to Pittman. “By going public, we’ve really offered that opportunity for people who have an interest in and understand the global food demand story, but don’t frankly have the knowledge to buy a farm on their own,” he said.
From the tenant farmers’ perspective, the company offers long-term, stable capital to support family farms, according to Pittman.
“We’re actually helping your traditional American farmer expand their business and fix their balance sheet,” he said. “All those things are important to a strong industry for our country.”
Meanwhile, Pittman commented on whether the current pace of acquisitions by his company can be sustained.
“There’s around $30 billion of farmland that is for sale each and every year, so, frankly, there’s not a theoretical limit on how much we can acquire. Valuations are good. Capitalization rates are attractive on the transactions we’re doing. So, our intention would be to keep deploying capital at this sort of pace in the coming years,” he observed.