Investing in Timberland and Farmland
By: E.J. Webber
Chances are when Dennis Moon, the Specialty Assets Manager for U.S. Trust – Bank of America Private Wealth Management – travels, he just might end up in timberland or a field of corn that goes on for miles. Going to great lengths to advise and shepherd investors, Moon and his team of “boots on the ground” experts in growing things, seek to achieve a return for investors through direct investment in farmland and timberland. Appreciation of the land, as well as the returns from farm leases, crop and timber production, make this an ideal time for investing in for those with capital. The beauty of this kind of investment lies in it having low or no volatility.
Moon began his 30 year career in the financial services industry with Wachovia – Wells Fargo, then dovetailed that expertise for the past 11 years, currently as Managing Director with U.S. Trust, Bank of America Private Wealth Management. U.S. Trust is the country’s oldest trust company. Knowing the specialty asset management business, also known as nonfinancial assets, backwards and forwards, gives him the opportunity to correlate growth opportunities to high net worth investors investors seeking to own something real and tangible. 2014 appears to be a year in which the factors that drive these investments in timber and farmland show great potential for a balanced portfolio. The yield aspect, stability, and low correlation to the equity market make for an optimum situation.
One of the points in the discussion of investing in land is the interest that investors have in sustainability and eco-friendly investments. “Timberland and farmland was green before it was cool to be that way,” states Moon. The other thing is that there are ultra investors with wealth who want the enjoyment of owning trees – lots of them; who want to explore their own land with a purpose. The crew at U.S. Trust can provide compelling opportunities that offer low volatility investment in natural resources that clients can also spend time enjoying based on biology and not driven by markets.
Direct investment through separately managed accounts provides the investor with this opportunity. Farmland for example, can produce an annual yield and a fairly consistent return similar to a bond. It also keeps the investment local rather than on a corporate level. Like a bond, a well-run farm may also provide an income stream that can grow over the years – not to mention the appreciation of the land itself. Consider also that the census indicates that farmers are aging with offspring not wanting to follow in their footsteps, it makes sense to savvy investors to generate a potential 10% annualized rate of return and a current yield of around 4% or higher.
The experts and those who work for Moon directly, work for the investor as well. The biggest selling point for U.S. Trust, in its over 50 year history of managing farm and timberland, is not only the customization opportunity of this asset class, but also the dedicated team-based individuals employed such as farm and ranch managers, and foresters, all with agricultural degrees and experience. As the housing recovery strengthens, timberland should show strong for the long term. As the need for global food production and natural resources increases, the U.S. farm agricultural operation will take a leading role. These types of investments are only available to ultra high net worth investors. Should you have access to the amount of capital needed for direct investment in this asset area, give Dennis Moon a call and then visit your own forest or farm.
Original article published in May/June 2014 issue of Private Air Luxury Homes Magazine