On Monday, 8,638 acres of Illinois farmland changed hands for a total of $55.311 million dollars, after the dust settled between a “battle of two entirety bidders,” according to Schrader Real Estate and Auction Company.
The land was offered in 46 total tracts, ranging from 15 acres to 597 acres. It soon became clear that large investors held the greatest interest and sought the entire land purchase, according to R.D. Schrader, president.
“The operators were in the room, the investors won out,” he says. “It was just a question of whether we had one buyer or a few.”
Schrader calls the auction an “interesting test” of the market because no offering of this scale had been available for a while.
“The price per acre of just over $6,400 exceeded the expectations of many of the observers for the predominantly levee-assessed river bottom land,” he says. “It’s evident that major investors continue to regard Midwestern farmland as a sound long-term investment. We’re continuing to see good demand for cropland as operators and investors alike look ahead to the 2017 crop year.”
The buyer, Farmland Partners Inc., says it intends to fund the transaction with proceeds from its recent public offering of common stock and new secured debt. A statement from CEO Paul Pittman, confirms Schrader’s long-term investment assumptions.
“We expect significant long-term appreciation on these properties due to their size and the incredibly efficient operating environment we expect to provide our tenants,” Pittman says.
According to Pittman, Farmland Partners will negotiate new lease agreement among multiple tenants. The acquisition will likely close in early 2017 and is subject to customary closing conditions, he says.