Farmland Returns Jump in Q4 2011
(NCREIF) The National Council of Real Estate Investment Fiduciaries has released fourth quarter 2011 results of the NCREIF Farmland Index. The total return for the fourth quarter was 8.70%, comprised of 5.11% appreciation and 3.58% income return. This is an improvement from last quarter’s 1.97% total return and last year’s fourth quarter return of 5.79%. Historically, the fourth quarter has been the strongest due to high income returns from the conclusion of the sale of the crops. That was not the case in 2011 as the 3.6% yield was the third lowest over the past decade. However, the 5.1% appreciation was the third highest over the past two decades for the fourth quarter.
The fourth quarter spike in returns is typically more prevalent in the permanent crops and this year was no different. The 12.16% total return was the highest since fourth quarter 2006. However, the 8.13% income return is only the fifth highest of the past decade, which reflects the strong seasonality of the income return mentioned above. The positive appreciation for the quarter and the year make 2011 the best annual return for permanent cropland since 2008.
Regional performance was positive across the board with every region showing a positive total return for the quarter and the year. In the fourth quarter and for the entire year, the Corn Belt was the best performing region. The fourth quarter’s 13.81% total return was highest of any region by over 200 basis points and the 24.87% annual return exceeded the second best region by over 700 basis points. All of the properties from the Corn Belt are annual farmland unlike some other regions that are a mix between annual and permanent cropland. This is the second consecutive year that the Corn Belt was the best performing region.
The Pacific West was the second best performer for the quarter at 11.06%. That region’s permanent cropland had the highest total return of any sub-sector with a total return of 14.56% in the fourth quarter. The Delta States’ 17.02% was second best for the year.
Stephen Kenney, Chairman of the NCREIF Farmland Committee and Vice President with the Hancock Agricultural Investment Group, noted that "the farmland asset class remains a strong asset class for institutional investors, especially those looking for income. This asset class continues to see more and more interest due to a stable cash flow component that many institutional investors are seeking in uncertain markets."
The NCREIF Farmland Index consists of 493 investment-grade farm properties; comprised of 365 annual cropland properties and 128 permanent farmland properties. The index includes 171 properties in the Corn Belt, 108 in the Pacific West, 59 in the Delta States, 51 in the Pacific Northwest, 38 in the Mountain States, 28 in the Lake States, 19 in the Southern Plains and 16 in the Southeast. This data enhances the ability of institutional investors to price the risk of farmland investments across the United States.
http://www.ncreif.org
The fourth quarter spike in returns is typically more prevalent in the permanent crops and this year was no different. The 12.16% total return was the highest since fourth quarter 2006. However, the 8.13% income return is only the fifth highest of the past decade, which reflects the strong seasonality of the income return mentioned above. The positive appreciation for the quarter and the year make 2011 the best annual return for permanent cropland since 2008.
Regional performance was positive across the board with every region showing a positive total return for the quarter and the year. In the fourth quarter and for the entire year, the Corn Belt was the best performing region. The fourth quarter’s 13.81% total return was highest of any region by over 200 basis points and the 24.87% annual return exceeded the second best region by over 700 basis points. All of the properties from the Corn Belt are annual farmland unlike some other regions that are a mix between annual and permanent cropland. This is the second consecutive year that the Corn Belt was the best performing region.
The Pacific West was the second best performer for the quarter at 11.06%. That region’s permanent cropland had the highest total return of any sub-sector with a total return of 14.56% in the fourth quarter. The Delta States’ 17.02% was second best for the year.
Stephen Kenney, Chairman of the NCREIF Farmland Committee and Vice President with the Hancock Agricultural Investment Group, noted that "the farmland asset class remains a strong asset class for institutional investors, especially those looking for income. This asset class continues to see more and more interest due to a stable cash flow component that many institutional investors are seeking in uncertain markets."
The NCREIF Farmland Index consists of 493 investment-grade farm properties; comprised of 365 annual cropland properties and 128 permanent farmland properties. The index includes 171 properties in the Corn Belt, 108 in the Pacific West, 59 in the Delta States, 51 in the Pacific Northwest, 38 in the Mountain States, 28 in the Lake States, 19 in the Southern Plains and 16 in the Southeast. This data enhances the ability of institutional investors to price the risk of farmland investments across the United States.
http://www.ncreif.org
Posted by Colvin & Co. at 1/24/2012 5:30 AM 
Categories: Farmland, Economic Growth
Tags: agriculture farmland farming Land Value
Categories: Farmland, Economic Growth
Tags: agriculture farmland farming Land Value
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