Farmland Partners Inc . (NYSE: FPI) President and CEO Luca Fabbri says there is “huge potential” to grow the share of farmland assets within institutional investor portfolios, especially given the sector’s risk return profile, asset appreciation, and inflation protection benefits.
A co-founder of Farmland Partners alongside former CEO Paul Pittman, Fabbri was named president in October 2021 after serving as the company’s CFO since its inception. He became CEO in February.
Speaking with the Nareit REIT Report, Fabbri said the value of U.S. farmland assets is about $2.7 trillion, with institutional investors accounting for probably 5% or less of that amount. That means that there is still a lot of education to be done to show investors that the asset class offers many potential benefits. Among those are the scarcity of the underlying asset, an attractive risk return profile, asset appreciation, inflation protection, and the absence of correlation with other asset classes.
Fabbri pointed out that 2022 was in general a very profitable year for farmers, especially row crop farmers, which comprise the majority of the REIT’s portfolio. This year is also shaping up to be a profitable year, he added. At the same time, he noted that growing crops outside means that there are volatilities inherent in the business.
Meanwhile, Farmland Partners has taken steps to de-lever the company, a process that will continue throughout the year along with potential stock buybacks, Fabbri said.
Fabbri also discussed how Farmland Partners is using some of its land for renewable energy opportunities, the role that farmers play as environmental stewards, and how technology is fundamental for the farming industry.