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'Low Volatility, High Returns': AcreTrader To Expand Portfolio, Democratize Farmland Investing

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'Low Volatility, High Returns': AcreTrader To Expand Portfolio, Democratize Farmland Investing

Global markets are historically volatile amid the COVID-19 coronavirus. Typically, cash is the go-to asset during uncertain times, but with recent improvements in technology, alternative investments have witnessed a boon.

Alongside this movement into alternative assets, AcreTrader, an investing platform that makes it easy to buy shares of hard assets like farmland, formally announced the closure of a $5 million funding round led by RZC Investments and Revel Partners.

As part of the development, AcreTrader’s founder and CEO Carter Malloy spoke with Benzinga regarding the company's prospects.

Why Farmland Investing?

Traditional farmland has been well-supported by earnings, food demand, and the low rate environment. During the Global Financial Crisis, strong farm earnings helped buoy farmland markets, dampening the effects of falling real estate prices.

According to NCREIF, during the last financial crisis, farmland produced positive returns every quarter, with the fourth quarter of 2008 netting investors an average of 7.33%.

“There’s a growing interest in alternative assets,” said Malloy. “I think the recent volatility in capital markets further increases that desire to diversify away from common assets like stocks and bonds.”

A Lack Of Access Problem

“I had a neighbor in San Francisco that wanted to invest in some farmland,” Malloy told Benzinga. “I was pretty shocked. You know, here is this high returning, low-volatility asset class, and there’s no platform for people to invest.”

The lack of an electronic, mobile-access investing platform for a hard asset like farmland increases the barriers to entry for traditional investors and some institutions.

“Despite the strong historical investment returns and profile of the asset, it just wasn't something that had a lot of professional capital formation or institutional investment. That was the genesis of AcreTrader.”

Since the founding, AcreTrader has raised capital and conducted millions of dollars in deals.

Growing Responsibly

With the new investment round, AcreTrader will expand its education library, available investment opportunities, and scale operations to better support surging demand.

“I think the funding helps us scale what we’ve already built. I mean, we just hired somebody new this week. So we’ll continue to hire and deploy resources responsibly. I think what’s most important to us is building a long-term sustainable business.”

Big Picture Goal

“We want to be the marketplace between capital and farmland.”

AcreTrader has a full-time analyst team and proprietary software that locates prime investment opportunities from a nationwide supply of farmland.

“We’re pretty committed to the hard asset of farmland and land in general. It’s a really unique and interesting one. It’s important that our team has some very uncommon expertise. We’ve got hundreds of millions of dollars in farmland management and investment expertise on our staff.”

Getting Started

“You can invest with as little as $10,000 today. Each farm goes into a unique LLC. Then you, the investor, own a portion of that LLC,” said Malloy. “If you buy 20 shares, you own two acres of that farm.”

Presently, the platform is only open to accredited investors, but Malloy intends to change that as the regulatory environment improves and AcreTrader scales its nationwide operations.

“Our goal is to democratize farmland investing. We have greater ambitions of allowing all people, all investors on the platform.”

To learn more about the recent funding round or how AcreTrader’s investments benefit from stable land value appreciation and annual dividend returns, visit acretrader.com.

Photo by freestocks.org from Pexels.

 

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Posted-In: AcreTrader Carter Malloy Coronavirus Covid-19 NCREIF Revel Partners RZC InvestmentsFintech