Seems like a group from the East thinks
so.
Canada could soon get its first
exchange-traded farmland management
stock.
A company called Bonnefield Canadian
Farmland Corp. has applied for an
initial public offering on the Toronto
Stock Exchange to try to capitalize on
the growing farmland-management
industry, a business that is very big
globally but only beginning to take off
in Canada. The company hopes to raise as
much as $100-million in the IPO.
Bonnefield’s plan is to act like a real-
estate investment trust that owns
farmland instead of office towers or
shopping malls. The company acquires
farmland and then leases it back to
farmers. It wants to find aggressive
farmers looking to grow, do sale-
leaseback deals on the land they own,
and help them acquire more land. Lease
income is collected and returned to
shareholders through dividends, with a
targeted yield of 3%to 4%.
A number of similar firms have popped up
in Canada in recent years that offer
investors exposure to farmland through
limited partnerships. But they have not
listed on the TSX because public
companies cannot own farmland in
Saskatchewan or Manitoba. Bonnefield is
trying to get around those rules by just
owning mortgages on farmland in those
provinces.
The farmland management business has
been slow to pick up in Canada, partly
due to the regulations around farm
ownership. But it is a big global
business that has attracted tens of
billions of dollars of capital. TIAA-
CREF, the big U.S. pension fund, owns
about US$2-billion of farmland on its
own.
According to industry insiders, farmland
works for investors because it offers
reliable returns and gives investors a
way to play the food industry without
being so vulnerable to volatile
fluctuations in crop prices.
In its prospectus, Bonnefield makes a
lot of the same points that other
agricultural companies have made: The
global population is more than seven
billion and growing, and the United
Nations estimates that food production
needs to increase 70% by 2050 (relative
to 2009) in order to keep up.
In terms of farmland specifically,
Bonnefield argued that it is recession-
resistant, is not correlated with
financial assets, and has proven to be
an effective hedge against inflation.
“If you’re concerned about inflation,
farmland is like gold with yield,” said
Stephen Johnston, head of Agcapita, a
Calgary-based farmland fund management
firm.
“It’s got a lot of interesting
qualities. The reason for its growing
appeal is that there’s something in
there for everyone,” he said.
Mr. Johnston said the farmland asset
class has consistently beaten stock
markets over periods of 10 years or
longer. According to Bonnefield,
Canadian farmland declined in value just
seven years out of 60 between 1951 and
2010, while Canadian stocks fell 15
years out of the same period.
Bonnefield also argues that Canadian
farmland is relatively cheap compared to
the United States, and is also more
productive than most other large food-
producing nations.
On the other hand, farmland management
firms are also vulnerable to the
problems faced by farmers themselves,
such as inclement weather and crop
diseases.
Bonnefield launched back in 2010 with a
private fund, which now owns more than
15,000 acres of farmland.
I almost own more farm land than they
control right now. Big woop.
I also like how these groups are always
adding smart renuable best farming
practices. What the hell do all of us do
out here any way. Gee.
When will this madness stop. AH yes when
the idiots cant find renters to farm the
land and guess what its getting damb
close.
so.
Canada could soon get its first
exchange-traded farmland management
stock.
A company called Bonnefield Canadian
Farmland Corp. has applied for an
initial public offering on the Toronto
Stock Exchange to try to capitalize on
the growing farmland-management
industry, a business that is very big
globally but only beginning to take off
in Canada. The company hopes to raise as
much as $100-million in the IPO.
Bonnefield’s plan is to act like a real-
estate investment trust that owns
farmland instead of office towers or
shopping malls. The company acquires
farmland and then leases it back to
farmers. It wants to find aggressive
farmers looking to grow, do sale-
leaseback deals on the land they own,
and help them acquire more land. Lease
income is collected and returned to
shareholders through dividends, with a
targeted yield of 3%to 4%.
A number of similar firms have popped up
in Canada in recent years that offer
investors exposure to farmland through
limited partnerships. But they have not
listed on the TSX because public
companies cannot own farmland in
Saskatchewan or Manitoba. Bonnefield is
trying to get around those rules by just
owning mortgages on farmland in those
provinces.
The farmland management business has
been slow to pick up in Canada, partly
due to the regulations around farm
ownership. But it is a big global
business that has attracted tens of
billions of dollars of capital. TIAA-
CREF, the big U.S. pension fund, owns
about US$2-billion of farmland on its
own.
According to industry insiders, farmland
works for investors because it offers
reliable returns and gives investors a
way to play the food industry without
being so vulnerable to volatile
fluctuations in crop prices.
In its prospectus, Bonnefield makes a
lot of the same points that other
agricultural companies have made: The
global population is more than seven
billion and growing, and the United
Nations estimates that food production
needs to increase 70% by 2050 (relative
to 2009) in order to keep up.
In terms of farmland specifically,
Bonnefield argued that it is recession-
resistant, is not correlated with
financial assets, and has proven to be
an effective hedge against inflation.
“If you’re concerned about inflation,
farmland is like gold with yield,” said
Stephen Johnston, head of Agcapita, a
Calgary-based farmland fund management
firm.
“It’s got a lot of interesting
qualities. The reason for its growing
appeal is that there’s something in
there for everyone,” he said.
Mr. Johnston said the farmland asset
class has consistently beaten stock
markets over periods of 10 years or
longer. According to Bonnefield,
Canadian farmland declined in value just
seven years out of 60 between 1951 and
2010, while Canadian stocks fell 15
years out of the same period.
Bonnefield also argues that Canadian
farmland is relatively cheap compared to
the United States, and is also more
productive than most other large food-
producing nations.
On the other hand, farmland management
firms are also vulnerable to the
problems faced by farmers themselves,
such as inclement weather and crop
diseases.
Bonnefield launched back in 2010 with a
private fund, which now owns more than
15,000 acres of farmland.
I almost own more farm land than they
control right now. Big woop.
I also like how these groups are always
adding smart renuable best farming
practices. What the hell do all of us do
out here any way. Gee.
When will this madness stop. AH yes when
the idiots cant find renters to farm the
land and guess what its getting damb
close.
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