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NCREIF Farmland Property Index Released

NCREIF Farmland Index Release Posts Negative Total Return for First Quarter

The National Council of Real Estate Investment Fiduciaries (NCREIF) has released the first quarter 2020 results of the NCREIF Farmland Index. The total return for the first quarter was -0.10%, down from 2.34% the previous quarter and 0.70% in the first quarter of 2019. This is the first time since the fourth quarter of 2001 that the Farmland Index posted a negative total return. The quarterly total return was comprised of a 0.38% income return and appreciation of -0.49%.

First quarter income return for the Total Farmland Index was 16 basis points lower than last year when the first quarter income return was 0.54%. Farmland values declined in the first quarter, driven by permanent cropland, posting appreciation of -0.84% after registering appreciation of ‑0.70% in Q4.

The trailing 4-quarter total farmland return was 3.98% through first quarter 2020, compared to 6.08% for the 4-quarters ending in the first quarter 2019. The annual total return was comprised of a 4.25% income return and -0.26% appreciation.

Rolling 4-Quarter Total Returns

Annual cropland outperformed in the first quarter with quarterly total returns of 0.66% for annual cropland and -1.35% for permanent cropland. Annual cropland outperformed on both appreciation for the quarter, with annual cropland appreciation of -0.27% versus permanent cropland appreciation of ‑0.84%, as well as income for the quarter, with annual cropland income return of 0.93% versus permanent cropland income return of -0.51%. Over the trailing year, permanent cropland returned 4.51%, compared to 3.69% for annual cropland. Since inception, total returns for these two categories have registered annualized returns of 11.81% for permanent cropland and 10.01% for annual cropland.

Rolling 4-Quarter Annual Cropland Returns

Six of the ten NCREIF regions registered positive total returns in the first quarter. The Southern Plains (2.10%), Appalachian (1.61%), Delta States (1.47%), and Southeast (1.04%), led regional performance for the quarter, while the Northern Plains (-3.10%), Pacific West (-1.24%), Pacific Northwest (-0.60%), and Lake States (-0.57%) regions all posted negative returns. Nine regions posted positive income for the quarter, with the Pacific West (-0.46%) the lone region to post negative income, and seven regions posted negative appreciation, with only the Southern Plains (1.06%), Appalachian (0.74%), and Delta States (0.73%) regions posting positive appreciation.

Rolling 4-Quarter Permanent Cropland Returns

The NCREIF Farmland Index consists of 1,163 investment-grade farm properties, totaling $11.7 billion of market value. These farm properties are comprised of 902 annual cropland properties and 261 permanent cropland properties. The index includes 374 properties in the Corn Belt, 232 in the Pacific West, 141 in the Delta States, 115 in the Lake States, 87 in the Pacific Northwest, 85 in the Mountain States, 66 in the Southeast, 36 in the Northern Plains, 21 in the Southern Plains, and 6 in the Appalachian Region. The index includes data provided by the following firms: Farmland Opportunity, Gladstone Land, Hancock Agricultural Investment Group, Prudential Agricultural Investments, UBS Farmland Investors, US Agriculture, and Westchester. This data enhances the ability of institutional investors to price the risk of farmland investments across the United States.

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