How To Invest In Farmland, With David Chan

Farmland has historically been an asset class with strong returns and low volatility, but it’s not the easiest asset class to access.

David Chan, chief client officer at FarmTogether, joins Andy Hagans to discuss how High Net Worth investors can access the farmland asset class, and enjoy its unique benefits to investors.

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Episode Highlights

An overview of the history of farmland as an investable asset class in the United States.
The two components that drive investments return from farmland, and the various deal types that place more emphasis on income vs. capital appreciation.
How farmland has performed as an investment asset during periods of economic contraction or recession.
Why there is a “valley” between “mom and pop” family farms, and institutional-grade agricultural assets.
An introduction to the FarmTogether platform, including the different types of investment offerings, and the investment minimum for each.

Today’s Guest: David Chan, FarmTogether

About The Alternative Investment Podcast

The Alternative Investment Podcast is a leading voice in the alternatives industry, covering private equity, venture capital, and real estate. Host Andy Hagans interviews asset managers, family offices, and industry thought leaders, as they discuss the most effective strategies to grow generational wealth.

Transcript

Andy: Welcome to the show. I’m Andy Hagans. And today we’re talking about a very special asset class within the world of private equity real estate, farmland, right? I drive by a farmland every single day on my daily commute and it really is an asset that the world’s billionaires and most sophisticated investors are investing in heavily. So I think it’s something that family offices, that high-net-worth investors need to be looking into. Joining me today is David Chan, who’s chief client officer at FarmTogether. David, welcome to the show.

David: Thanks so much, Andy. Great to be here.

Andy: Do you agree with my lead, David? I mean, that was a little bit of editorializing. But I’ve seen it in, like, the headlines, billionaires buying up farmland, they’ve been doing it for years.

David: I don’t know if I would stake my wagon on everything billionaires do, they can be an eclectic bunch. But I would say that I think farmland is an excellent asset class for capital preservation. It’s an excellent asset class as an inflation hedge. It’s an uncorrelated asset class to many of the mainstream asset classes, like public equities and fixed income. So particularly in today’s economic environment, where I would just personally define it as an uncertain one, I think an asset class like farmland with many of these qualities is particularly attractive.

Andy: So you kind of alluded to this capital preservation and that’s a phrase I’ve set on this program. I’ve heard that phrase more in the past 12 months than I had in the previous 12 years, and we also have family offices on the show and that’s a big theme for families. How does farmland perform in a recession? I mean, I’m not saying we’re in a recession right now, it’s kind of a Jekyll and Hyde thing. But it seems like a lot of investors are almost presuming that we are, you know, the bull market notwithstanding. So has farmland held up, historically speaking, during recession or contraction periods?

David: Yeah, absolutely. It’s a great question and I think it’s funny because I’ve heard many people say that they’re not saying we’re in a recession right now but I’m also not hearing anyone saying we’re not in a recession.

Andy: Exactly.

David: You know, I think the way I look at capital preservation, there’s lots of different things to factor, of course, real returns versus nominal, you know, the basics and whatnot. But I think the simplest way if you want to do across-asset class comparisons is looking at drawdowns. It’s something that applies to every single asset class. And so, you know, when we look at public equities, when we look at fixed income public equities in 2022, were down I think…S&P 500 was down roughly 17%. Fixed income, Barclays bond aggregate I think was down 14%. So we saw meaningful drawdowns across many of the mainstream asset classes in what was arguably a very tumultuous year but drawdowns nonetheless.

When we look at farmland, our benchmark for farmland is the NCREIF Farmland Index, NFI. The NCREIF is a real asset data provider that compares institutional returns for various real asset classes. So real estate farmland, timberland would be some of the different benchmarks that NCREIF measures. When we look at NFI, the Farmland Index under NCREIF, we have data going all the way back to 1991, quarterly data. So roughly 32 years or 31, 32 years of quarterly data available. Do you want to guess how many quarters saw a drawdown in farmland from 1991 to today?

Andy: That’s dangerous territory. You better just tell me so I don’t embarrass myself, David.

David: Two.

Andy: Two quarters, wow.

David: Two quarters. Two quarters. The most recent one being, it was Q1, I believe, in 2022.

Andy: Okay.

David: But all in all, 2 out of 128, 130 quarters were negative and the vast majority were positive. So that’s one way that I consider farmland and I think we can stand by a statement like it’s a solid asset class for capital preservation. One, because there’s two income streams. It is a real asset, so it has that same mechanical profile as a real estate investment. You have your income from either rental income or operating income, and then you have your appreciation. So you have two income streams that the investment can produce, and you’re in an industry, agriculture, that is so closely tied to CPI and inflation. When you think about what agricultural products are used for, it’s not just food and feed. Fiber is such a big part of it. Probably most of the things that are sitting around your desk right now have some corn or soy used to produce them.

So agricultural products are consumed and utilized by us as consumers in so many ways beyond just food and feed and fuel. So I think it is the ultimate inflation hedge because of that. And so you have this dual return stream asset class that mirrors inflation because of the nature and virtue of how agricultural products are used and is an asset class that has really strong fundamentals because of the market that we’re in right now. We are a commodity market, we are dictated by supply and demand on the demand side, and aggregate we have a growing global population, we have a rising middle class in many parts of the world that are demanding higher caloric diets and more complex diets that are putting a bigger demand on more nutritious and, frankly, more expensive commodities like meat and alternative proteins like tree nuts coupled up with supply.

In the U.S. at least, farmland is way down in terms of the number of acres that are being used to produce agricultural commodities. Since, I think, 2004 to 2017, about a 13-year period, this is a census that we saw, the latest census from the USDA, we’ve lost about twice the size of the State of Massachusetts in terms of area of land that was previously used for farmland. So if you’re from a western state, Massachusetts is incredibly big but if you’re from New York, like myself, thinking about losing, not one but two Massachusetts worth of farmland is meaningful. So we have increasing demand, decreasing supply for an asset that is basically ingrained and intertwined in so many different parts of the economy. It makes for a very resilient asset class.

And so that’s why we see almost every single quarter of the NCREIF Farmland Index being a positive one, despite going through periods of tumultuous economic times, that period would have included the dot-com bubble, 9/11, the great financial crisis, the Russian grain embargo, it was more of an agricultural issue than a broader market issue, but one that hit our asset class, that was between 2012 and 2014. And then, of course, COVID. So no shortage of black swan events.

Andy: Yeah, farmland reminds me of multi-family perennial, favorite sector on the show, obviously a favorite sector for family offices for high-net-worth investors. The saying is everybody needs a roof over their head. And then there’s an underlying supply and demand imbalance that sort of underpins that market with strong fundamentals. If I’m applying that same mindset to farmland, I’m saying, well, everybody needs a roof over their head, and everybody’s got to eat, right? So, and as you pointed out, globally, there’s just a demand for more nutritious foods, probably more calorie-dense foods, just essentially, we need more food, especially as the world population is still growing.

One thing that kind of surprises me, though, back to the point that there were only two negative quarters of growth, depending on the commodity, I’m not a commodities expert, but my impression is that they’re pretty volatile in terms of pricing compared to multifamily where if rent moves 7% in a year, that’s not a boring year, right? Whether it moves up or down 7%, that’s an interesting year, whereas with a commodity, if a commodity moves up or down 7%, it’s kind of like, does anybody even notice? I mean, I know people notice, but you know, there’s much more fluctuation in price swings in a lot of these crops. So I’m just sort of surprised at, why doesn’t that move the price of the farmland asset? Is it because buyers and sellers kind of know that that’s a short-term fluctuation and the pricing is more based on long…or could you explain that dynamic to me?

David: Absolutely. I do think that asset values for farmland tend to be more, I would say less sensitive to short-term commodity prices. So if my prices go up 20%, your land is not worth 20% more that year, and vice versa. So that’s certainly one aspect of it. I think another aspect is the index assumes and covers a broad range of commodities and geographies. And so when we’re thinking about farmland, and maybe the same as if you’re thinking real estate investments, if you just pick one particular market or one segment, you know, if you’re only judging real estate performance by performance of commercial real estate in San Francisco, that’s not going to be a pretty number, at least historically short-term. If you open that up to other markets, you open that up to potentially multifamily or other segments as well, obviously, the values will be different.

And so for us, I think a big part of it is the resilience and I’d say lagging nature of asset valuations, they’re not extremely sensitive or responsive to commodity prices because, frankly, land does not change hands very often, it certainly does not change hands every single year. So there’s this implicit understanding that most landowners are going to be owning farmland for at least a couple of years if not a couple of decades. So that’s one, I think, underpinning tenet behind all of this, but the other being that we’re talking multiple geographies and multiple commodities. If one particular commodity is down in your portfolio, another could be up. And that’s the benefit of diversification, of course. So that holds true whether you’re investing in farmland or public equities, or whatever it may be. So I think that’s probably why the drawdown figure is as small as it is. While we do see commodity price fluctuation, generally speaking, asset valuation has been to the northeast meaning up and to the right, but at a very gradual pace.

The other thing I’d mention there is also deal structure is one way that investors can consider based on their risk appetite, and what their hurdle rate is, what type of exposure they’re looking for in their farmland investments. So we have deals that are leases where our cash yield is derived from either entirely rental income or mainly rental income. So we don’t have much market risk. Obviously, we have counterparty risks with whoever we’re leasing to. But we don’t have market risk in that if my prices and yields are up, we get that upside, if they’re down, we get downside.

On the flip side, we have other structures, which are called direct operating structures, where our cash yield is derived from operating. And so here, we’re paying a third-party operating partner to provide the farmland management services, and that encompasses the labor expertise, technology, equipment needed to actually farm our properties. So we pay a flat service fee for that work and in exchange, we are owners of the income stream of the actual operating income from the property. So in that case if yields and my prices are up, we enjoy all that upside, if they’re down, we eat that downside. That’s where you would certainly see the most volatility in at least year-to-year returns because, obviously, you’re dealing with a little bit more choppiness in commodity prices and commodity yields. We didn’t even touch the yield yet, but weather events, disease, pests can either boost yields or depress yields. So that’s another factor.

But the way we structure deals can be altered based on investor preferences. So for an investor who’s looking for a higher yield, we have that option to be able to capture all that upside. For investors who would rather limit their upside in order to cap their downside, at least on an income standpoint, they can lease the property out, depend on that base rent for the income and still enjoy the appreciation of the underlying asset.

Andy: Understood. Well, all this talk about yield…and this is probably going to be a hard question to answer but I’m going to ask it anyway. Because I know income investing is so popular, you know, we’ve seen private credits come into the limelight, seems to be getting increasing interest from family offices from high-net-worth investors, just those higher yields. I always like to say income never goes out of style, income investing never really goes out of style. So understanding that there’s going to be wild fluctuations depending on the crop and yield and all that, is the income stream…you know, is there a range you could give it as like a potential LP, what sort of range of income streams or yield would you possibly be looking at if you’re investing in farmland? And is the return more weighted towards the capital appreciation but it’s like you still enjoy some yield, or is it vice versa, it’s mainly an income investment?

David: So it is a tough question to answer because there’s so many different types of deals, and particularly that latter question on whether or not the overall performance of the investment is more tied to the capital appreciation versus the income, that’s going to depend on whether or not we’re looking at a development property where I would say most of the value in that property is, in fact, in the capital appreciation. We’re deferring income for the first three to possibly five years because we’re developing a property meaning we’re recycling old trees, planting new trees, or planting new vines, and we are dealing with biology, these are biological assets. So as much as we’d like to, we can’t speed up the growth rate of those trees or vines, we have to wait three, four, five years…

Andy: So David, is that, like, comparable to, like, value add, or is that…? That almost sounds like new construction, like, again, in…

David: Yeah, certainly. Value add would be how we think about it. And so the yields there, the returns are expected to be much higher. Mature cash yields, once the property is developed, we typically right now are looking at high single digits. So 8% to 9% cash yields net, and IRRs for those types of properties would be typically at least 11%, could reach as high as 15% net IRR. So those would be the highest risk, highest yield. Other structures where maybe we’re buying a turnkey property. If we’re buying a turnkey property, we’re obviously paying more today than we would for a property where it’s just barely in value. Here, we’re barely in value plus the present value of the trees on the property and that present value is going to be meaningful if those trees are producing a healthy income. So the capital appreciation in that instance would not be as big of a role or play as big of a role in the overall underwriting and performance of the investment, the income would be playing a more meaningful role. And for those types of properties, we’re typically looking at, I would say, expected cash yields of around 6% net, maybe 7% net.

We also have, again, the lease structures where we could lease to a tenant if we don’t want to deal with the operating risks. And on leases, we’re seeing cap rates, I would say range from 4.5% to probably 6.5% in today’s market. So it is variable, depends on investor preferences, risk, suitability, goals. But I think that’s also the beauty of our space, we are able to tailor and customize all these different return profiles for very different investors. Someone who is investing on behalf of maybe their children who have maybe a 50-year hold period in mind is going to be looking for different investment criteria and have different objectives than maybe an upcoming retiree where the income may be a more important factor.

Andy: Absolutely. Now, I know, FarmTogether, you’re a big name in the space of retail access, family office access to farmland as limited partners. But I actually want to, if we could, not only go back to the beginning of FarmTogether, but even prior to that, historically, how have investors accessed this asset class? I mean, I remember reading Meb Faber’s book about the Yale Endowment Fund and the Ivy portfolio and all that. And that was kind of my impression, back to the lead of this episode even, big money, institutional investors able to buy this stuff up at scale. And then on the other end of the spectrum, you have mom and pops, right, with the 40-acre, 80-acre, 120-acre, whatever, family farm. Has that really changed? Or take us back, I guess, before FarmTogether, what was the lay of the landscape from the perspective of an LP or a family office?

David: Sure. It’s interesting, in some ways, much has changed, and others, not much has changed. So I would say what has not changed is the makeup and composition of the U.S. farmland market, and I think we can start there. So I think there is a notion…I’ve seen so many different articles talking about industrialized farming in the United States, big-scale farms, and all that. And I understand the vantage point, but if you really want to see industrial farming, go down to Brazil. Their farms have runways on the farms where you can land planes to deliver and receive product. That would be an industrial farm. The United States does not have many industrial farms, we have smaller farms. And it’s because of our history. If you look at U.S. history and the legacy of certain pieces of law, like the Homestead Act, we deliberately zoned out and cut out pieces of land to be small homesteads, economic-producing homesteads that could be farmed for families.

And obviously, U.S. history is much more complicated than that. But that is the DNA, that is the premise of lot sizes and acre parcels and basically what we’re working with today when we look at supply. We don’t have many farms that are on the market or come up for sale that are $100 million farms, or $75 million farms. You know, if we’re looking at real estate, and luxury real estate, no one blinks at a $75 million property, there’s plenty of them. It’s not a unicorn, it’s nothing special. In the U.S. a $75 million farm coming up to market is very special. There are not many of them. So that being said, when you look at capital allocators and many of these pensions and endowments that have mandates to deploy hundreds of millions of dollars into a strategy, how do you do that efficiently if there are only so many $75 million properties available? It’s tough, and it’s competitive. And there is a cadre of allocators on large pensions and endowments who compete in this space, and they all compete or tend to compete on those same larger properties. And it is competitive because everyone’s trying to move big amounts of capital in a space where the supply doesn’t really support that thesis.

On the flip side, there are lots of individuals, be it neighbors or other, I consider neighbors to be strategics, who want to maybe expand their existing footprint, their neighbor is selling their farm, it’s adjacent and helps economies of scale, of course, they’re going to be interested in adding on that parcel. But they’re constrained by capital. So they may be looking at smaller lot sizes and additions of maybe up to a million or so. But once you start to get north of that, it becomes less and less likely for an individual to take down a parcel on their own. And it leaves us with this valley and supply of farms that are around $2 million up to, say, $20 million in value that the existing pensions and endowments who are in the space who have big mandates to move hundreds of millions of dollars doesn’t really move the needle for them. Some of them actually, many of them have stated investment minimums where they can’t consider a property that’s smaller than, say, $20 million in value. So even if it’s an A-plus diamond property, has amazing fundamentals, if it’s $17 million, I’m sorry, we can’t look at it. So that’s the upper end of the valley.

The lower end of the valley individuals who can’t take down a $2 million deal because of capital limitations. That’s where FarmTogether is active. And what we’re seeing is that our focus on making farmland more accessible to retail investors, to family offices, to registered investment advisors, to smaller plan sponsors, smaller and medium-sized endowments, this is a deal size range that is the sweet spot for many of those different investor groups. And there is lots of supply available and more supply coming to market over the next two decades as we see a generational transfer of ownership, which is already underway materialized.

So I think, back to your question on what has changed, what hasn’t, the supply fundamentals in the sense of our composition have not changed, we still have relatively small-sized farms in the United States. What is changing is that we have new competitors in the market who are able to construct and build products that are able to consider properties that are in that medium deal range value that before were often forgotten and would either be sliced into lots of different smaller properties or aggregated into one bigger property. Now there’s a focus on that valley. And it’s…

Andy: There’s a middle market now. I mean, basically what I’m hearing is mom and pop, and then there is institutional. When FarmTogether is able to basically bundle together 20 or 50 or 100 LPs, then suddenly purchasing a $10 million, $16 million, whatever, asset is very doable. I mean, frankly, even attractive because now if I’m a smaller family office or a very high-net-worth investor, I can now directly be an LP in a particular asset, hopefully multiple assets to get some diversification, and it’s in that sweet spot. I mean, my experience is in that institutional level, as you pointed out, you might have Yale, Harvard, and Bill Gates all bidding against each other, you know, in the multifamily world, and sometimes that means that cap rates get really, really compressed at the very high levels. And so sometimes there’s even more, I would say value or more attractive multiples in the middle market in some of these sectors. Is that the case in farmland? Does your dollar stretch a little further buying the $15 million asset versus the $75 million asset?

David: We think so but it depends on how you define dollar. And obviously, you have economies of scale on the larger properties, but what you may lose there…but what you gain, there’s still certainly economies of scale on a $15 million farm, massive economies of scale. But the bigger advantage is in the acquisition itself. I subscribe to the real estate school of thought that the most important part of the equation is the purchase price. So I am a believer of that. And we have not found ourselves yet in a situation where we were actively competing in a bidding war over a single property. We are often directly dealing with a seller and negotiating with a seller and not facing that auction environment that can lead to compressed cash yields and compressed cap rates. So we think that that is really critical.

And, you know, I think institutional investors are almost forced to sometimes overpay because of the nature and the scarcity of properties that meet that size. And that is a limitation that they have to deal with. And it hurts on the capital appreciation side. It hurts quite a bit. So I think what you may lose in terms of some unit economics and scale of efficiency on a $15 million property versus, say, $75 million, you gain a lot back in the appreciation and potential appreciation and the fact that you’re likely not in a bidding scenario for the acquisition of a property.

Andy: I don’t want to get in a bidding war with Bill Gates or the Yale Endowment Fund, I’ll say that. Well, I want to talk about your platform specifically, kind of the nuts and bolts. So I’m an accredited investor, let’s say, you know, maybe I sold my business or whatever, had a liquidity event, I want to allocate a million bucks to alt, $100K at a time to different subs. So I might have $100,000 or $250,000 that I want to put into farmland. I go to FarmTogether, is there farmtogether.com? What are my options? How do I sign up? How do I review deals? Is there a fund? Are there individual offerings? Walk me through what I’ll see as a prospective investor.

David: All the above. So we do have individual offerings. They’re all 506(c) Regulation D-exempt security offerings, so they’re crowdfunded deals. We build a syndicate of investors, all of whom need to meet accreditation standards to invest in those single-asset deals. And so I’d say that’s a good fit for anyone who wants to take the time to do due diligence on each acquisition and basically have the ability to select which properties, geographies, commodities, return risk profiles they want to be a part of. The minimum dollar amount for those offerings is a $15,000 investment. So if you were looking to invest, let’s make it easy and say $150,000, you would be able to diversify that across 10 different single assets potentially.

Andy: Well, yeah. David, that’s really…I mean, in my experience, most offerings that are accredited investor-only have that $100,000 or $50,000 investment minimum. So $15,000, that actually is a big differentiator because now if I have $100,000, I could actually potentially get a very diversified portfolio while still being able to select individual deals. So to me, that’s…Are there multiple deals open at a time or do they kind of open and close one at a time?

David: There can be multiple open at a time. We just had two simultaneously open, we’ve since filled the syndicate and closed one of the two. We currently have one offering open, which is a citrus orchard in California. We expect that to be closing shortly, I think we’ve raised 85% of the equity for that deal. And our next deal will likely be a pecan orchard in Oklahoma, just to give you a sense of the diversity here. So we’re going from California citrus to Oklahoma pecan. So we try to target different geographies, different commodities, again, for investors who are taking advantage of our lower minimum and creating a diversified basket or diversified portfolio of different farmland investments.

Now, some investors, that’s ideal for them and they love having that ability and I’d say independence of being able to select which properties they invest in. Other investors don’t want to take the time to figure out which properties they want to invest in. I hear things often like, “I’m paying you as the manager to find the farmland properties. I don’t want to have to do that work. I don’t know why I shouldn’t be investing in almonds versus pistachios or whatnot. So I’m trusting you with that job and I want you to do that for me.” And I understand that perspective as well. So for investors who want a diversified option, that’s basically auto diversify, they don’t have to do that work on their own.

We also have an open-ended fund. So that’s the FarmTogether Sustainable Farmland Fund. It’s a product that’s open-ended, it’s focused on sustainable farmland in the United States. Being that it’s open-ended, we can accept new capital on a quarterly basis. So there’s no deadline or hard close on when we are raising capital. If an investor decides that they expect to be selling their business in Q3, and so they expect to have a lot of cash to deploy in Q4, they would have the option of waiting until Q4 to invest in our fund. So that’s the beauty of the open-ended nature of it. And that fund currently has holdings in Northern California, Southern California, and Colorado. We’ll be making a fourth acquisition in Q3 of this year in Oklahoma and we expect to be making a fifth acquisition before year-end, which would likely be in the Pacific Northwest. And we’re invested in citrus, pistachios, corn, soybeans, soon we’ll have pecans, and then likely hazelnuts or apples or pears in the Pacific Northwest. So already a pretty diversified basket of both commodities and geographies.

We target a 4% to 6% net cash yield on the fund and an 8% to 10% net IRR. And it is a fund. So whereas single asset deals are structured as limited liability companies and investors have a fractional interest of ownership in the LLC, the fund is a GPLP structure. So investors would be admitted as limited partners to the fund. And we also have other options as well. If investors want to either build their own private syndicate of investment partners that they like to work with to own an asset on their own, or if they want to own an asset entirely on their own, we have a product called bespoke, which are effectively separately managed accounts where we’ll source and underwrite and manage a farmland investment property on behalf of either one or a small group of investors.

And then the final product I’ll mention, which is one that I’m very excited about because I think there’s so much appetite for other 1031 alternatives in the real estate world, would be our tenancies in common or TIC deals. And our TIC deals are 1031 Exchange eligible. So investors who do have 1031 Exchange proceeds would be able to exchange into one of these deals as a replacement property for their relinquished property and enjoy those potential tax savings. And the minimum for those other products that I mentioned, our fund minimum is $100,000. Bespoke is the highest minimum, of course, because they’re outright buying a property. So that’s typically around a $3 million minimum. And then the tenancy in common or TIC minimum is generally around $500,000.

Andy: Understood. Yeah, that’s a lot of different options. And you know, I think, increasingly, every family office is different, every high-net-worth investor is different. Even every advisor is different, you know, they’re looking for different things. So I respect the diversity of product offering. And David, we’re almost out of time, but I had one more question. You know, you mentioned the TIC, the 1031 Exchange eligible product. But to zoom out, on this show, we talk a lot about multifamily and 1031s, DSTs, all these different tax-advantaged forms of investing. In real estate with multifamily, even if you’re not doing a 1031, there are other tax advantages, right? Pass-through depreciation, all kinds of different things in the tax code. Are there intrinsic advantages like that in some of these farmland offerings where it’s a tax-advantaged investment? Even putting aside the 1031, which I know that in and of itself is very attractive, but are there other tax benefits to investing in farmland?

David: Yeah. So I think I’d be slapped on the wrist if I didn’t save the company line, which is we can’t give tax advice. But that being said, there are certainly potential tax benefits inherent to farmland investments that real estate investors probably would be familiar with because they apply to farmland as they apply to real estate. And I would say probably the most common that I think is used in real estate that we see in farmland as well would be the concept of bonus depreciation, and being able to depreciate 100% of all capitalized expenses in the year which they are incurred at the federal level. State is different, but at least at the federal level, you can record 100% in the year in which those expenses are incurred under bonus depreciation rules. So we do utilize that in our deals often as well, any depreciation benefits do flow through a pass-through to the investor under Schedule K1. So that would be reflected as effectively a net operating loss, and then that investor may be able to either use that net operating loss to either offset current or future income in that investment or if they have other tax liabilities elsewhere in their portfolio, they may be able to use that to offset those liabilities.

Andy: Understood. Yeah. And again, the ability to 1031, we have so many listeners and viewers of the show who do…you know, all their real estate transactions are essentially 1031. So I think that’s very attractive when platforms allow you to 1031 into the platform because really it opens you up to so much more capital, right, because there’s a longer…

David: And I think to the 1031 investor, we’re I hope a breath of fresh air, we’re a much-differentiated offering. When I’m considering 1031s, or helping friends look at 1031s, I think they all look very similar to one another, the options, the risk profiles, the returns, it’s all an apartment building in one suburb, it certainly has its own unique characteristics, but it’s not that different than an apartment building in another suburb.

Andy: For better or worse, right? I mean.

David: For better or worse.

Andy: Yes.

David: Farmland is obviously different. So we are very different offering, a very different asset class within real estate and it’s all considered like-kind. So if your relinquished property is a gasoline station in Plano, Texas, you would still be able to likely exchange into a wine grape vineyard in Oregon. That’s considered a real asset to a real asset, so it’s like-kind. So I think offering that differentiation is something that I’m excited about and something that…you know, the TIC product for us is…not new. We’ve now been, I think, offering TICs for about two years, but newer, and I think especially in today’s real estate market, where there is a lot of activity, and we are seeing 1031 volume increase, having alternatives outside of traditional commercial or multifamily is certainly a positive.

Andy: Hundred percent. I mean, that’s one of the biggest reasons that alts are so popular is their ability to diversify portfolios. So even within that alternative’s allocation, that power to diversify, very, very popular, very important. And I think when we talk about alternative investments on this show, we cover a lot of different things. We cover private credit, private equity, but real estate is the 800-pound gorilla, right? So it’s cool. It’s fun for me to dive into some of these little sectors that I’m not as familiar with, that I know some of our audience probably is not as familiar with. And that being said, David, where can our audience of high-net-worth investors and family offices go to learn more about FarmTogether and all of your offerings?

David: Our website is definitely the best place to start, farmtogether.com. And then additionally, I would just offer, if anyone has specific questions either on farmland as an asset class or FarmTogether, please feel welcome to reach out to me as well. My email is [email protected].

Andy: Awesome. David, thanks again for joining the show today.

David: Thank you, Andy. It was great to be here.