Farmland Returns Increase to 2.45 Percent In Third Quarter

1
Farmland Returns Increase to 2.45 Percent In Third Quarter

Farmland strong returns continue, despite (or because of it’s “bubble designation”).

The National Council of Real Estate Investment Fiduciaries (NCREIF) Farmland Index total return was 2.45% for the third quarter, up from 1.16% in the previous quarter.

The Farmland total return included 0.96% appreciation and 1.49% income return. According to NCREIF, the annual total returns for farmland were in the range of 5% to 10% before the recession in 2001 and experienced a significant increase during the 2004 to 2007 housing boom.

Axon Capital Up 60% In 2020; Says These Tech Stocks Are Value Stocks

Stock MarketAxon Capital was up more than 60% for the first 11 months of 2020 after making some changes to deal with the year's challenges. In his delayed third-quarter letter to investors, which was reviewed by ValueWalk, Axon's Dinakar Singh noted that the year was not only "incredibly stressful" but also "successful." Q4 2020 hedge fund Read More


 


Farmland total annual returns

The annual total return for farmland declined during the 2008 financial crisis until 2010 declined, but it was never below 5%. The NCREIF reported that the annual returns of farmland rose above 20% following the recovery from the financial crisis.

According to the NCREIF, the total annual farmland returns of 12.74% for the period ended in the third quarter represent a healthy performance compared with historical standards.

A strong income return of 8.08% was the main driver for the annual return combined with a 4.42% appreciation.

Farmland Total Annual Returns

Permanent cropland continues to outperform

The NCREIF reported that permanent cropland continued to outperform annual cropland in the third quarter. It is the fourth consecutive quarter the permanent cropland achieve strong performance.

During the quarter, permanent cropland recorded a rotal quarterly return of 3.26% (2.20% income return and 1.06% appreciation) compared with annual cropland’s 1.8% return (0.92% income return & 0.88% appreciation).

Permanent cropland achieved a total return of 23.98% over the past year, five time higher than the 4.54% total return for annual cropland.

The Pacific West total farmland returns for the period was 3.85% compared with the 3.17% for the Mountain Stares and 3.08% for the Southeast. The NCREIF noted that the income and appreciation of Pacific West were strong at 2.15% and 1.70% respectively.

“Pacific West returns are generally strongest in the fourth quarter when income is realized from the sale of crops. Due to a strong close to 2014, the Pacific West still leads all regions on an annual basis with a total return of 24.85% for the year ending in the third quarter 2015,” according to NCREIF.

Farmland Quarterly Return By Region

During the quarter, Southern Plains, Delta States, and Pacific Northwest reported total farmland returns of more than 1%. On the other hand, the Lake States and Corn Belt regions were delivered the worst performance with 0.11% and negative 0.05% total returns, respectively.

No posts to display