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Tightening U.S. Farmland Market Presents a Growing Hurdle for Farm Investment Managers

Farmland fund paying $108 million for 29,000 acres in Texas and Wisconsin as it strives to invest mounting cash backlog.

Madison, WI, December 05, 2012 --( UBS AgriVest Farmland Fund Inc., a Connecticut-based farm real estate fund has emerged as the winning bidder in two widely watched private land auctions in Texas and Wisconsin, according to an article by Farmland Investor Letter.

The purchases are unusual for their scale and reflect both the growing ranks of institutional investors aiming to boost their exposure to the buoyant agricultural real estate sector and a tight market in which few attractive properties are available for sale.

Through September, Midwest land values are up 13% from a year, according to a survey of agricultural bankers by the Federal Reserve Bank of Chicago. That pace is down from 14% and 22% annual gains in 2010 and 2011. Speaking at a conference hosted by the Chicago Fed last week, Murray Wise, founder of Westchester Group—a Champaign, Ill. farm asset manager now owned by New York retirement fund manager TIAA-CREF—speculated that as much as $10 billion in institutional capital is searching for a home in U.S. agricultural land. “Institutional investors are very frustrated at the moment,” says Mr. Wise. “They feel almost locked out of the Midwest marketplace as rent income yields continue to decline and the cash position of the operating farmer in most cases is too much for them to compete with.”

To read the complete analysis, visit their Farmland Intelligencer blog.

About Farmland Investor Letter: Farmland Investor Letter is published by Mercator Research, LLC, a Madison, Wis.-based firm focused on valuation and investment return trends for agricultural real estate. Subscribers include individual landowners, appraisers, farmily investment offices, endowments, lenders, U.S. government agencies, real estate brokers and other industry professionals. Mercator Research hosts, and agricultural real estate news, analysis and information portal.
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