$500 Million Everglades Deal Postponed Again

Florida Gov. Charlie Christ is getting a lesson that real estate brokers know all too well: big deals take time.

It’s been almost two years since Christ announced the $1.75 billion purchase of 187,000 acres in the Florida Everglades from United States Sugar. Since then the economy has tanked and the purchase price has been lowered twice: to $1.34 billion and now $536 million. In each instance, the number of acres has also fallen: first, to 180,000, and, in the most recent iteration, to 72,500. Faced with a March 30 deadline, the governing board of the South Florida Water Management District voted 9-0 to extend the closing for another six months.

An added element to the high-profile transaction was an in-depth front-page story in The New York Times last week that questioned many deal points, including the cost per acre, which The Times suggested is much too high, the tracts themselves, which The Times suggested include some of the least valuable belonging to U.S. Sugar, and the purpose of buying six separate tracts without reaching out to Florida Crystals, United States Sugar’s chief competitor and the owner of key blocks of adjacent land.

But the principle focus of the article was how Gov. Christ’s plan to save the Everglades will instead rescue United States Sugar. Since its publication, supporters and detractors have descended upon the media with their own interpretations of the deal.

Read more from a gubernatorial candidate who opposes the purchase HERE.

Read more about environmentalists who support the purchase HERE.

Land Report 100: No. 62 Clayton Williams Jr.

OF THE COUNTRY’S 100 LARGEST LANDOWNERS, FEW ARE AS COLORFUL AS CLAYTIE.

A passionate approach to land stewardship is but one of Clayton Williams’s claims to fame. The diehard Texas Aggie is a born entrepreneur whose many pursuits have ranged from insurance salesman to banker, farmer, rancher, real estate developer, big-game hunter, philanthropist, conservationist, and, at one pivotal point in his career, front-running gubernatorial candidate. And like any self-made man, he can ride out tough times with the best of them—even down to his last bullet.

Williams’s trailblazing traits date to his colorful forebears, who mixed it up with the likes of Kit Carson, Billy the Kid, and Geronimo. The native Texan was born in Alpine in 1931 and raised in Fort Stockton. After attending Texas A&M and fulfilling his military obligations, he cut his teeth selling life insurance in Mineral Wells. But fate called him back to West Texas, where in a Fort Stockton coffee shop he learned about a farm for sale. He struck a deal with its owner to form an oil and gas partnership, and the cornerstone of his career was set. From that small start, his financial empire eventually grew to include a host of companies, from cow-calf operations to a safari company to several entities bearing the ClayDesta moniker, a nod to himself and wife Modesta.

It was in Modesta that the wildcatter found a soul mate who shared his love of the land and sense of adventure. In his book Claytie: The Roller-Coaster Life of a Texas Wildcatter, Mike Cochran describes Williams’s run as “an exciting mix of hard work and great fun, building pipelines and drilling wells one day and branding calves and working cows the next—all embellished with a spectacular marriage. Claytie and Modesta really are bigger than life.”

After an unsuccessful run for governor of Texas in 1990, Claytie turned his considerable energies on going public with Clayton Williams Energy Inc. (CWEI). With an estimated net worth of $100 million, his name was added to the Forbes Four Hundred. Today, he is a fixture on the Land Report 100 and ranked No. 62 in 2009 with 146,655 acres. During the past decade, CWEI has drilled 167 horizontal wells, mostly in the Austin Chalk formation as well as the Cotton Valley Reef in Texas, in Louisiana, in Mississippi, and in New Mexico.

“Claytie is, by all measures, one of a kind,” says Cochran. “He’s an absolutely wonderful character. With his ranch he’s been really innovative and was recognized nationally for some of the innovations to trap water and to get the best use of the land.”

Ask the Expert: Andy Smyth

Andy Smyth is a straight-speaking man, runs a great brokerage business in Idaho, and has become a good partner with The Land Report. Andy recently told me that after experiencing a downward period in the land market the likes of which he’s never seen before, he is finally seeing signs of things turning around for land deals in his neck of the woods.

We asked Andy if he would mind us picking his brain a little bit, and he obliged.

Land Report: What got you into the land business, and how long have you been at it?

Andy Smyth: I was born into it. My great-grandfather Smyth sold his farmland near North Platte, Nebraska and moved to the Boise Valley in 1905. He, my grandfather, my father, and I farmed in this valley from then until the spring of 2008, when I retired from active farming after 34 years. My endeavor in real estate marketing began about 12 years ago as a diversification to my farming business. It seemed a natural outgrowth to my many years of involvement in various agricultural organizations and community service organizations throughout the state of Idaho.

Land Report: What’s are the biggest changes you have seen in your 12 years of marketing property?

Andy Smyth: The first was the run-up in land values beginning in the mid-‘90s that lasted until about the first half of 2008. The second was the decline in activity from then until very recently. During the first period I referred to, it was fairly easy to move land parcels. Since the end of ’08 and beginning of ‘09, it has become very difficult to move large parcels. It now requires a high level of persistence and focused advertising to attract interested buyers with the ability to “write the check.”

Land Report: You mentioned to me the other day that the market seems to be on the up-tick in your area. What are you experiencing?

Andy Smyth: In the last month, mid August until today, I have received more inquiries than I received since the first of the year. I have had several investor groups contact me with inquiries about large parcels. I have had numerous individuals inquire about agricultural properties for investment and primary use purposes. I have had two ranch showings in the last 10 days and another scheduled for the end of this week. I have had four inquiries in the last 24 hours. I have not closed a deal as a result of this activity, but if this rate of inquiry continues, there is bound to be a resulting close coming. I am confident.

Land Report: Tell us about some of your top current listings.

Andy Smyth: I have a number of ranch/recreational/investment quality properties available.

- A 6,080 deeded acre parcel within 1.5 hours of Boise is an exceptional property offering outstanding hunting of all types. It contains 700 acres BLM permanent lease acres adjacent. It is one contiguous parcel in a private setting. Year-round stream, 300-acre reservoir within 1/4 mile of boundary. No buildings.

- A 1,700 deeded acre parcel, offering adjacent permanent lease land access to an additional 5,600 acres. This is a beautiful parcel offering timber at higher elevations and year-round streams. Home, shop, etc.

– 2,646 deeded acres. 1,640 acres BLM permanent lease adjacent. 2 mile by 2.5 mile parcel running to the top of an 8,748 foot peak. Great hunting, access. Irrigation well. Home, shop, etc.

Pictures, more information on these parcels, other available properties at www.smythfarms.com

Land Report: What do you consider your unique strengths as a listing broker?

Andy Smyth: My many years as an active, full-time farmer myself, allows me to fully understand the elements involved in selling the family farm or ranch. I am able to empathize in a way that some brokers can’t. My priority as the listing agent is to protect the interests of the party selling their ranch or farm. I spend the money required to advertise in a way that many brokers do not. Representing the type of property that I do, requires a willingness to advertise in venues where the folks who have an interest in this type of property and who can “write the check” may be found. Not all brokers do this.

That’s why I advertise in The Land Report. It’s an invaluable tool in securing new listings. It is an impressive, high quality publication. When a potential listing client sees my ads in recent issues of The Land Report, it is obvious to them that my commitment to represent their property in a serious way is beyond question.

Land Report: From the buying side, what does your brokerage offer newcomers to your markets?

Andy Smyth: I come from a world where a person’s word is their bond. My role, as someone helping a potential customer select a property, is to provide honest, straightforward information. My responsibility is to provide correct, unbiased answers to their questions so they can make an informed decision regarding what is in their best interests. I take my role and responsibilities very seriously.

My long history in the circles of the ranch and farm community can be very helpful. There are often properties which may be for sale that are not listed or being actively marketed. I also offer financing sources for folks who may not be able or want to write a check for the full amount at closing, but who may have the ability to secure financing for this type of property.

On the Block: 1,600 acres of Illinois Farmland Sept. 10

VeraSun Energy will auction approximately 1,600 acres of Illinois farmland on Sept. 10 with Schrader and Westchester auction companies managing the sale.

The land, located in Montgomery, Madison, and Vermilion counties, consists primarily of high-quality tillable farmland, including some located in areas that offer potential for industrial and commercial development.

The sale is being conducted as part of VeraSun’s efforts to maximize the return for its creditors as part of its Chapter 11 reorganization. The company had acquired the land over the years in support of its ethanol-related businesses.

“Because of the stability of farmland prices relative to prices of other assets in recent months, owners have been reluctant to sell their land. As a result, there have been fewer opportunities to obtain high-quality tillable land. By selling it in tracts, we will enable smaller bidders to participate on an equal footing with larger ones. In fact, 15 of the 25 tracts are 50 acres or less, and no tract is larger than 250 acres,” said Rex Schrader, president of Schrader Real Estate & Auction Company.

Properties to be sold include:

• Approximately 487 acres in Litchfield, in Montgomery County. The property, which is primarily tillable farmland,  will sell in 11 tracts ranging from approximately two acres to approximately 83 acres. It is primarily tillable farmland.
• Approximately 380 acres in Granite City, selling in eight tracts ranging from approximately 1.2 acres to approximately 230 acres. The tracts, located two miles from I-270, include two homes and have rail access.  The tracts include land near a new Lowe’s and Wal-Mart.
• Approximately 733 acres in Danville, selling in six tracts ranging from approximately 35 acres to approximately 250 acres.

The auctions will be held in two sessions. At 9 a.m., the Montgomery and Madison county properties will be sold at Staunton Knights of Columbus Hall in Staunton, Ill. The Vermilion County land will be sold at 6 p.m. at Beef House restaurant near Covington, Ind.

Individuals seeking additional information can visit www.schraderauction.com or call 800-451-2709.

Fortune Reports Soros and Rothschild Invested in Land

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.

170 Acres on the Block Saturday in Illinois

Update: The complete tract of land went unsold during the brief auction. The first tract at 50 acres was passed on at $120,000, the second tract at 40 acres was unsold at $96,000 and the third tract at 80 acres was unsold at $192,000. A combination of all three tracts was passed on as well.

170 acres, broken up into three tracts of 50, 40 and 80 acres, goes on the block Saturday in Marion County, IL. The land can be used both for hunting and CRP income. Buy A Farm Land and Auction Co. will host the bidding.

The minimum opening bids on the property start at $2,400 an acre.

Located on Blackburn Road, 15 minutes from I-57 in Centralia, the property could be a solid buy if you happened to scoop up all three parcels. Each has a decent CRP income; they total about $6,500 per year. According to the listing, deer abound on the property.

This would make a nice long weekend retreat for hunters in St. Louis or Chicago.

Bids will be taken at the Iuka Grade School or online. 10% down is required at the end of the auction with the balance at closing.

For Sale: 30-Acre Napa Valley Vineyard

Tired of some sommelier always offering overpriced vino? Think you could churn out a choice wine using your own grapes? Then what’s stopping you?

This 30-acre Napa Valley vineyard is all about the dirt . Jocelyne Monello of Heritage Sotheby’s International Realty has it listed for $6.9 million.

Almost all of the property is dedicated to grape growing. It also has a 2,400-square-foot aging building, a 5,200-square-foot outdoor work pad, and a 1,000-square-foot residence on the premises. Better yet, it already has an approved permit for a 100,000-gallon winery.

At $6.9 million, the property is a solid investment in itself. The current owner has a triple net lease that brings in $300,000 a year.

Remember, you  may not be able to direct films like Francis Ford Coppola, but at least you could try to make wine like him.

Foreign Investors Own Major Stake in Maine

Foreign investors own an interest in 21.2 million acres of U.S. forest and farmland, an amount that equates to just under 1 percent of all the land in the U.S. Every one of the 50 states as well as Puerto Rico has foreign ownership, but far and away the largest concentration was in Maine with 3,323,846 acres (16 percent of the national total). Forest and timberland accounted for more than 3 million of those acres with Canadian companies the leading landowners.

The figures were compiled by the Farm Service Agency from filings required by the Agricultural Foreign Investment Disclosure Act of 1978 and are available in this handy 178-page report.

For Sale: Split Rock Ranch

As previously reported, the Bell Ranch is the largest piece of property for sale in the United States today. At more than 290,000 acres, the massive holding would instantly qualify its new owner(s) for inclusion on The Land Report 100.

But what about the second largest land listing? I did a little digging and came up with a much different type of landholding: the 193,000-acre Split Rock Ranch in south central Wyoming, which is listed with Ranch Marketing Associates.

This is a much different transaction. First off, only 16,000 acres of the ranch are deeded. The rest is BLM, state, and private leases. The second proviso is that the $14 million purchase price is for a 50 percent interest. The remaining 50 percent interest would be owned by a silent partner.

Split Rock is a working cattle ranch and runs 2,400 pair, plus 600 yearlings. It features 12 miles of Sweetwater River on the property. This isn’t the sort of property a weekend warrior need consider.

That’s not to say a little fun couldn’t be had on the property like trout fishing in the Sweetwater or world-class hunting for elk, deer, and antelope.

Sold! “Nicest Lakefront Property in East Tennessee”

Update: According to Chip Miller of NAI Knoxville, the Fort Loudon Lake property sold Saturday morning for $26.5 million to Bryan Testerman of Testerman Construction. That’s $54,000 per acre. Additional details to follow.

Original Post: Nearly 500 acres just outside Knoxville on Tennessee’s Fort Loudon Lake is up for absolute auction this weekend. As long as someone shows up with the $100,000 cashiers check required to bid, there will be a new owner for what tax rolls call the Al Kraemer Farm.

This pristine piece of farmland sits on a peninsula overlooking the popular lake, which sees an estimated two million visitors per year. There are three buildings on the farm. One dates back to 1910, but a newer 3,700-square-foot residence was built in 1983 and has four bedrooms and four bathrooms. The structures are irrelevant, however; the land is prime for development.

“It is the nicest piece of lakefront property in East Tennessee,” says Chip Miller of NAI Knoxville. “It’s in one of the highest growth areas and the demographics of the surrounding area are great.” Miller says he expects “only a handful” of people to make bids on the property. Will the land be sold for development? “Most certainly,” Miller said. The price though is the biggest question mark.

“It could go for $10 million or $40 million. It’s arguably worth $40 million,” Miller said, which equates to roughly $80,000 an acre.

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