On Thursday, Arkansas fractional farmland investment platform AcreTrader–which was featured on an episode of the Investable Universe podcast–announced that it has raised a $12 million Series A funding round, led by Jump Capital. Ohio thematic investment fund Narya Capital, Revolution’s Rise of the Rest Seed Fund also participated in the round, along with existing investors Revel Partners and RZC Investment. The new funding round, which brings AcreTrader to $18 million in total capital raised, will be used to improve its agriculture, finance and technology offering.
“Over the last few months, we’ve consistently seen our offering sizes grow while our funding windows shrink, showcasing the fast-growing desire surrounding this resilient asset class,” said AcreTrader founder and CEO Carter Malloy. “As a company that seeks to support and connect farmers and investors in a way that no one else is, we’re humbled by this monumental growth, and look forward to leveraging these new funds to continue on that trajectory.”
Despite broader economic, social and health disruptions of covid-19, AcreTrader closed two rounds of funding over the past 12 months, quadrupled its investor pool to include investors from 48 U.S. states, and recorded a 12-fold increase in funds raised on the platform. Along with the new round, AcreTrader will add Jump Capital partner Peter Johnson to its board of directors, along with Kenny Traynom, former Chief Operating Officer of Westchester Group, a division of Nuveen, the world’s largest farmland investor and a founding Board Member of sustainable agriculture standards initiative Leading Harvest.
“Farmland investing is becoming increasingly sought after in the current macroeconomic environment,” Jump Capital’s Johnson said in a comment on the investment. “Jump Capital is proud to lead this investment to help accelerate AcreTrader’s growth and broaden access to this compelling asset class. I’m also looking forward to joining the company’s board of directors to help guide the company as it drives the charge to modernize farmland transactions.”
FarmTogether Has Big News
Another fractional farmland investment platform Farm Together–also a recent featured guest on the podcast–announced on Thursday that it has successfully closed the largest single-asset crowdfunded farmland investment to date. The land asset, Galaxy Organic Apple Orchard, a 201-acre organic redevelopment property in Franklin County, Washington, closed at $22 million. The property has a target net IRR of 15 percent and a target net average cash yield of 19.6 percent, and is expected to be of interest to institutional investors and large growers upon exit.
Farm Together has also registered a significant increase in investment activity in 2020, recording 178 percent user growth on the platform, and more than 3,000 percent growth in investments, with “multi-million dollar deals closing in under an hour,” according to a company statement.
“The continued growth we’ve witnessed validates our mission to provide investors with greater access to farmland investment opportunities while simultaneously channeling funding for the transitions necessary to support sustainable and profitable farming. Through our offerings, we’re able to leave a lasting and positive impact in more ways than one,” said FarmTogether founder and CEO Artem Milinchuk.
UBS counsels patience
Meanwhile, in a U.S. property outlook released on Thursday, institutional investor UBS Asset Management said farmland values are expected to remain solid in 2021.
“Despite weak income returns since 2013, a trade war, and covid-19, there is no evidence of any significant or widespread financial stress in the U.S. agriculture sector, only some pockets of stress observed in parts of the Midwest,” UBS wrote in Thursday’s market outlook. “Government payments, designed to offset the adverse effects of covid-19, are not expected to continue in 2021; yet, most observers believe that cropland rents will remain steady in 2021 despite the outlook for income to farm operators.”
While this is welcome news for farmland owners, the resilience of land prices could mean a relative shortage of suitable land acquisition opportunities for institutional investors.
“The dearth of investment-grade properties available for sale is a challenge for deploying investment capital,” UBS wrote. “The overall strength of the U.S. farm economy, with solid farmland values and income returns, provides little, if any, motivation for farmland owners to liquidate their land holdings. Moreover, there are very few alternative investments that offer equal or more attractive long-term potential returns if one were to sell farmland. When the absence of any significant financial stress in the sector is added to this, the result is very few attractive farmland buying opportunities. Investors seeking to deploy capital into farmland must be patient in this challenging market.”
