Paul Pittman, chairman, president and CEO of Farmland Partners Inc. (NYSE: FPI), joined REIT.com for a CEO Spotlight video interview at REITWorld 2015: NAREIT’s Annual Convention for All Things REIT at the Wynn Las Vegas.
Farmland Partners’ portfolio consists of 253 farms with a total of 104,742 acres located across the United States. Pittman highlighted the potential of green energy projects on the firm’s assets. He explained that the company buys a farm based on its agriculture value, but as soon as it owns a property, the company begins to identify the land’s solar, wind, minerals and development potential.
“When we can get green energy projects, it’s frankly a much higher return for our investors than just the agriculture rents would be,” Pittman said.
Pittman also discussed the FPI Loan Program, which was launched in August. The program expects to originate loans secured by farm real estate, with most loans expected to be in principal amounts ranging from $500,000 to $5 million at fixed interest rates and maturities of up to two years.
As Pittman explained, although farmland values haven’t declined, the incomes of farmers have as a result of lower commodity prices.
“What we’re offering to farmers is an opportunity to make them an asset-based loan, which can help them through what’s a somewhat squeezed profit-and-loss statement for a short period of time. It gives us good returns and it offers another piece of financial flexibility to farmers,” he said.
Meanwhile, Pittman pointed out that the most rapidly growing area for Farmland Partners will continue to be the southeastern United States.
The area is attractive to the company because properties are undervalued and capitalization rates are quite high, Pittman said. At the same time, because it’s a densely populated region, the upside potential for solar, wind and other sorts of real estate development are very high, Pittman noted.
“We’ll continue to put a lot of money to work out there,” he said.