June 2021

U.S. Farmland Sector Primer

Prepared by Green Street Advisory Group

Executive Summary

Investment Rationale

  • U.S. Farmland is one of the largest commercial real estate sectors (~$2.5 trillion) and remains under allocated among institutional real estate investors. The sector has delivered steady returns through cycles that are best viewed over long time horizons.
  • Farmland broadly consists of row crops (e.g., corn) and permanent crops (e.g., fruits). Row crops tend to generate more predictable cash flows compared to permanent crops which are more prone to various production risks.
  • Farmland as an investment vehicle offers unique attributes compared to traditional real estate, including lower risk of obsolescence, lower fungibility risk, and lower capex burden. Farmland is also a “zero-vacancy” sector.


Demand Drivers

  • Agriculture has benefited from tremendous innovation (i.e., productivity gains) over the years, but has experienced no fundamental disruptions in the way food is produced; land is still the essential component for food production.
  • Demand for food in the U.S. and globally is increasing at a steady pace. Agriculture is an industry essential to U.S. food security, muting longterm demand risk.
  • Population growth has vastly outpaced the growth in available arable land worldwide, leading to a shrinking stock of available agricultural land per capita.
  • Farmland’s attractive supply/demand dynamic can offer a combination of income stability and growth prospects to landowners through cycles. U.S. agriculture is competitive on the global stage and is well-positioned to capture incremental growth.


Investment Attributes

  • Commodity prices are volatile, but income from farm operations has shown to be relatively steady and stable over time.
  • Farmers’ income is a function of both price and productivity. Steady and growing yields from best-in-class U.S. farming operations have helped balance the fluctuation in commodity prices (which reflects short-term imbalances in supply and demand of a certain commodity).
  • The U.S. government deems the agriculture sector so essential to a functioning society that it provides support mechanisms to farmers, which provides another layer of income stability.
  • Landowners can structure land leases that exhibit even less volatility than farmers’ income from operations, but traditional real estate investors must challenge their conventional wisdom when assessing term and credit of these land lease investments.
  • Farmland investments offer initial yields at the lower range of traditional real estate sectors, but historically superior NOI growth and lower cap-ex spending have proven to be the true drivers of total return outperformance over time.


Source: Green Street Advisory Group

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Forward Looking Statement

The U.S. Farmland Sector Primer includes “forward-looking statements” within the meaning of the federal securities laws, including, without limitation, statements with respect to our investment objectives, strategies, economic updates, other plans and objectives for future operations or economic performance, or related assumptions or forecasts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” or similar expressions or their negatives, as well as statements in future tense.

Although Farmland Partners Inc. (“the Company”) believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs and expectations, such forward-looking statements are not predictions of future events or guarantees of future performance and our actual results could differ materially from those set forth in the forward-looking statements. Some factors that might cause such a difference include the following: the outcome of ongoing litigation, general volatility of the capital markets and the market price of the Company’s common stock, changes in the Company’s business strategy, availability, terms and deployment of capital, the Company’s ability to refinance existing indebtedness at or prior to maturity on favorable terms, or at all, availability of qualified personnel, changes in the Company’s industry, interest rates or the general economy, adverse developments related to crop yields or crop prices, the degree and nature of the Company’s competition, the timing, price or amount of repurchases, if any, under the Company’s share repurchase program, the ability to consummate acquisitions or dispositions under contract and the other factors described in the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, and the Company’s other filings with the Securities and Exchange Commission.

Any forward-looking information presented herein is made only as of the date of this communication, and the Company does not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.