Lisle, IL, May 02, 2011 --(PR.com
)-- Farmers and landowners now have an alternative to simply selling their farmland for cash thanks to Nicholas Hindman and his team of agricultural and investment specialists. Hindman is a CPA and financial expert who grew up on an Iowa farm. Hindman and his team have spent the last 2 ½ years interviewing hundreds of farmers.
Hindman has just launched two funds 1. American Farmland Partners (AFP) and 2. American Farmland Partners Corporation (AFPC) which acquire farmland using securities instead of cash. Farmers who need or want cash may opt for a combination of stock or partnership interests (depending on the state the farm is located in) and up to 40% cash. Non-land-owning investors may invest cash in either AFP or AFPC.
Acquisitions done with a security only, and not cash, allow farmers to avoid any current tax.
An important consideration given the fact that many farmers and land owners have had their farms passed down through their families or purchased them many years ago and probably have a very low basis.
The best part of Hindman’s structure is that participating farmers and/or their heirs, may continue to occupy and operate their farms, benefiting both from the financial results of not only their operations but those of the other farms owned by the funds located in other geographic areas.
Hindman says, "Farmers get the liquidity they need and want while giving investors the opportunity to invest in agriculture in a way that they can't get anywhere else. And, we're keeping America's remaining farmland in the hands of the people who have stewarded it so well for generations.
"We believe we're going to play a significant role in domestic farmland acquisitions for the foreseeable future when farmers and their accountants, financial advisors and estate planners do the math and compare the numbers.
"The difference between what we offer and what they get if they sell to anyone else is significant; paying a capital gains tax, investing the net dollars and not participating in the future income and farmland value appreciation vs. no immediate capital gains tax, potentially increasing the value of the farm by making it a part of a publicly traded consolidation of independent growers and participating in long term income growth and appreciation."
Hindman adds, "As a farmer or land owner, why would you sell to some big insurance company, foreign government or faceless agricultural real estate investment fund when you can gain this kind of financial flexibility with other farmers just like yourself through American Farmland Partners?"
Keeping the farmers involved also allows AFP and AFPC to lower acquisitions costs as these Funds are seen as “friendlies” not someone there to grab the farmers land from them.
Managerial expenses should also be lower and the preservation of the underlying asset is more likely than with other Funds that simply rent purchased farmland because Hindman’s farmers still have a vested interest, something other Funds can’t say.
Hindman continues, "Other Funds may try to imitate us, but no other Fund in existence has the foothold we have with the farmers. Our management team is made up financial people, people from agriculture and farmers, who still farm, yet have the sophistication and depth of also having other agricultural businesses that complement their farming operations. Collectively they have thousands of farmers as friends, clients and possible acquisition targets. These men also see what has been occurring in agriculture, with the consolidation of seed companies, machinery dealerships, ag retailers, grain processing facilities, etc.
"Our Board believes that independent grain farmers will benefit in much the same way as 'Big Ag' has by pooling their own farmland, increasing market share, reducing expenses, and raising revenues and profits. This group, through collective bargaining and a moderate policy of production and supply control could influence the prices of the commodities they produce. In addition, pooled bulk input purchases will reduce production costs and increase revenues for both farmers and cash investors."
Hindman says, "Participating farmers won't be giving up their farms. They'll just be changing the manner in which they own the farms. And, our cash investors will end up owning a share of some very expensive real estate, bought right, from farmers who want to be a part of our deal. It will all be managed with low expenses. Based on the reaction we've already gotten we're expecting a great deal of participation from both farmers and investors."