US Capital Markets: REITs - Farmland Partners

US Capital Markets: REITs Farmland Partners Inc.

Nick Kunz

David Kruth, CFA US Capital Markets: REITs Columbia GSAPP MSRED

Nov 25, 2018

FPI / S&P 500 - Market Performance Comparison

The analysis conducted here examines one company; Farmland Partners Inc. (FPI). This analysis is made in an effort to afford additional insight into the decision making process for US REIT investing.

Farmland Partners Inc (FPI)

FPI is a publicly traded US REIT. The company is an owner and operator of agricultural rental property. FPI IPO’d in 2014 and owns roughly $1.0B of agricultural real estate assets containing 165,000 acres in 17 states across the United States. The geographic concentration of their assets are generally in the Midwest, California, and throughout the South. The company has 130 tenants that produce 26 different agricultural commodities. FPI’s has an experienced management in a niche market and operates a small shop of roughly 13 FTEs at its corporate headquarters in Denver, CO.

Advantages: ● Discount Relative to NAVPS ● Non-Material CapEx ● Few Public Market Competitors, Mainly Gladstone Land Corp (LAND)

Disadvantages: ● Significantly Underperforming Stock ● Small Market Cap in Niche Market, Many Unknowns ● Agricultural Market Sensitive to Recent Trade Policy Pressure

Comments: ● July 2018 Market Drop Overreaction to Allegations on Inflated Revenues ● Prudent Valuation Fundamentals, Market Price Could Rebound Despite Low Sentiment ● Recommend Small Near-Term Exposure at Present Discount and Rising Agricultural Land Prices

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FPI - Earnings Analysis - 18E / 19E

Exhibited here is the anticipated NOI and FFO/S for FPI in both 2018 and 2019 at years end based on Q3 2018 reports.

FPI - Valuation Analysis 18E

Exhibited here is the anticipated current valuation of FPI based on Q3 2018 reports.

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FPI - Debt Analysis - 18E / 19E

Exhibited here is the anticipated debt for FPI in both 2018 and 2019 at years end based on Q3 2018 reports.

FPI - Implied Cap Rate Analysis - 18E

Exhibited here is the implied cap rate and enterprise valuation for FPI in both 2018 and 2019 at years end based on Q3 2018 reports.

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