Investment fund ‘still believers’ | Alberta company sees land price almost double since 2008
An Alberta-based investment company is selling more than 19,000 acres of farmland in Saskatchewan.
Calgary-based Agcapita is winding up Farmland Fund I, the first of four farmland investment funds under the company’s management.
The Registered Retirement Savings Plan eligible fund was launched in early 2008 and deployed about $10 million in investment capital, which was used to buy cropland throughout the province.
The fund matured earlier this year, meaning assets in the portfolio are being sold and proceeds returned to fund investors.
Karim Kadry, investment manager with Agcapita, said Fund I holdings include roughly 19,300 acres of crop land located in 16 municipalities.
The company is soliciting bids for the entire portfolio or for individual parcels of land, he said.
“When we first launched the fund, we purchased farmland at an average of around $439 per acre,” Kadry said.
“We believe that … as per figures released by Farm Credit Canada, the value of the farmland has roughly doubled.”
He expects that the same land would sell today at an average value of $1,000 to $1,100.
Kadry said interest in the holdings is strong, adding that market values still show Saskatchewan farmland selling at a discount to land in Alberta that has a similar productive capacity.
“I think the interest has been really amazing,” he said. “As soon as we announced that we were starting the wind-up process, within a couple of hours we received a lot of inquiries from different entities.”
Kadry said land in the portfolio is located in different regions of the province. It was assembled to minimize production risk.
Despite the liquidation, Agcapita still sees Saskatchewan as a solid investment, he added.
“We are still believers in investing in farmland in Saskatchewan,” he said.
“The same solid fundamentals upon which we made our decision (to buy land) are still holding today.”
Officials with Farm Credit Canada said farmland values continue to rise in Saskatchewan, maintaining a consistent upward trend that began in 2002.
According to FCC data, a parcel of average Saskatchewan farmland valued at $100,000 in January 2008 was worth more than $190,000 in December 2012. Those values were determined using average sales figures on 29 benchmark Saskatchewan properties.
In its most recent farmland values report published earlier this year, FCC said interest in Saskatchewan land from out-of-province buyers continues to influence prices.
Some retiring farmers are selling large blocks of land to take advantage of strong prices. Many land sales completed in 2012 weren’t advertised.
Amber Tuplin, a farmland appraiser with FCC said the increase in Sask-atchewan land values is based on several factors.
“Some (of those factors) vary significantly between regions … such as supply and demand, weather conditions, commodity and livestock prices, interest rates and what the land is used for,” Tuplin said.
Overall, “they’ve increased significantly.”
All told, Agcapita’s four farmland investment funds have acquired close to 45,000 acres of agricultural land in the province.
The company is continuing to raise additional investment capital through its latest offering, Farmland Fund IV. That fund is expected to attract investments worth roughly $20 million.