LandReport.com » International

Fortune Reports Soros and Rothschild Invested in Land

Eric OKeefe — Mon, 22 Jun 2009 07:00:53 +0000

As millions of landowners already know, investing in a piece of property does more than just bring piece of mind. It can bring an excellent return. This story is one worth repeating, particularly in today’s economic climate when Americans have witnessed the demise of blue chip investments such as AIG, Bear Stearns, and Circuit City.

But landowners aren’t the only ones with an eye to a good return. As the following article from Fortune attests, some of the world’s savviest investors recognize the potential for substantial returns, including hedge fund manager George Soros and banking scion Jacob Rothschild.

Pay particular attention to the paragraphs that focus on Shonda Warner, an ex derivatives trader for Goldman Sachs who launched Chess Ag Full Partners, an investment firm that acquires undervalued farmland.

In exchange for a seven-year lockup, a 2% management fee, and 20% of profits, she figures she can deliver the investors in her first fund an annual return of 13% to 16% – about 4% to 6% from crop yields, around 8% from land appreciation, and the rest from hedging.

Based on historical returns for farmland, that’s an attainable goal. According to research by Terry Kastens and Kevin Dhuyvetter, professors of agricultural economics at Kansas State University whom Warner recruited to be advisory partners in her fund, the average annual return on U.S. farmland since 1950, including crop yield and land appreciation, is 11.5%, vs. a 12% annualized total return for the stock market. And the farm returns actually came with about half the volatility of stocks.

Read more at:
“Betting the Farm,” Fortune, June 10, 2009.

Largest Drop in Rural Land Prices Worldwide? The Ukraine

Grant Gannon — Thu, 16 Apr 2009 12:17:38 +0000

According to this ABC Australia report, land values around the world are plummeting. The hardest hit country? The Ukraine.

The value of rural land in the Ukraine has plummeted a staggering 75 percent. The Australian news report indicates that the basics of the problem are the same there as everywhere else: thanks to the credit crisis the previously well-lined pockets of investors are no more. The report also references, but does not detail, a 5 percent drop in land values for the United States and Great Britain.

Brazil to Issue Deeds to Thousands of Landowners in the Amazon Basin

Eric OKeefe — Thu, 11 Dec 2008 12:00:50 +0000

Brazilians have long feared that foreigners were exploiting great expanses of the Amazon River Basin, a story we covered earlier this year when the Brazilian government began to investigate unlawful land sales to overseas interests. Now the country has established a program to ascertain ownership of farms of all sizes and streamline the process by which landowners can get deeds to their property. The root cause of this initiative? Less than 4 percent of privately owned land in the Amazon is actually deeded.

“No one knows who owns what, and that is the source of economic disintegration and violent confrontation at the grassroots,” Brazil’s strategic affairs minister, Roberto Mangabeira Unger, told The Associated Press. “We must settle this problem if we are going to move forward on other issues.”

Tops on the government’s list is protecting the interests of thousands of farm owners. Under the government’s plan, farms less than 100 hectares (250 acres) will be deeded at no cost. Farms larger than 100 hectares will be required to pay to receive title with the price commensurate with the size of the farm. Those farms larger than 2,500 hectares will require congressional approval to receive title.

“For the first time in our history we will have a form of social and economic organization that is powerfully slanted to the small and medium-sized owners and farmers, not to the big guys, who will be the losers,” he added.

Mexico Opposes Ethanol

Eric OKeefe — Mon, 30 Jun 2008 07:00:41 +0000

As we’ve seen over the last few months, skyrocketing commodity prices are pushing land values to record levels. They are also squeezing cattlemen and other producers who rely on corn and other grains to fatten livestock and poultry. One of the loudest voices protesting this trend has been Texas Gov. Rick Perry, who petitioned the EPA to grant a 50 percent waiver on the 9 billion gallon corn-based Renewable Fuel Standard. Now another vocal opponent of ethanol has emerged: south of the border.

Mexico is clearly feeling the heat. Last week Mexico Agriculture Secretary Alberto Cardenas called for ethanol producing countries to reduce production of grains for alternative fuels. (The U.S. is the world’s leading ethanol producer with Brazil a close second.)

According to the AP, Sec. Cardenas blames ethanol for bankrupting many of his country’s cattle and poultry farmers as well as causing food prices to hit record highs. The government has responded by freezing prices on more than 150 food products.

678,000 Acres for $20 Million?

Eric OKeefe — Wed, 18 Jun 2008 13:00:09 +0000

For the price of a penthouse overlooking Central Park, an investor could also buy 1,000 square miles in Brazil. Prices such as this listing in the Amazon River basin’s Madeira River are one of the many reasons that many are looking overseas as well as here in the U.S. But as this article in The International Herald Tribune points out, price is only one of the considerations when purchasing in a foreign country. Much of the article focuses on land purchases made by Johan Eliasch, chairman of Head Sports and owner of a Brazilian lumber firm that has acquired massive amounts of property in the Amazon basin. The Brazilian government alleges the company has engaged in illegal logging and has levied a record $275 million fine on Eliasch’s company, which denied any wrongdoing. Many American landowners have utilized a similar approach when buying in Mexico: setting up a Mexican corporation that acts as titleholder. But the real story here is the size of the numbers we’re talking about in this market:

“Foreign land investment in Brazil jumped 347 percent between 2003 and 2007, according to central bank figures, with about $1.7 billion invested by foreigners in land in 2006 and 2007. The land reform agency says 3.1 million hectares, or 12,000 square miles, out of a total 5.5 million hectares held by foreigners are in the Amazon.”