Investors in the Farmland Properties Inc. FPI real estate investment trust (REIT) must be disappointed to see it continuing downward last week. Similar to many office and retail REITs, the farm concept in the sector is finding more sellers than buyers as worries about the banking system continue to hit home.
For a New York Stock Exchange-traded REIT, market capitalization of $531 million is relatively small, and Farmland Properties is having a good 12 months, with funds from operations (FFO) up by 197%. The FFO growth rate over the past five years shows an increase of 41.5%
Farmland has purchased, and now leases and operates 340 farms totaling 195,000 acres in 20 states.
The REIT trades with a price-to-earnings ratio of 60 and, at this price, is available for purchase at a 10% discount to its book value. It’s lightly traded with an average daily volume of 440,000 shares.
Short interest at 3.31% is higher than most REITs, an indication of lack of confidence among short sellers. If forced at some point to begin covering, a better-than-usual rally could develop.
Farmland Properties pays a dividend of 2.48%.
In mid-January, Janney Montgomery Scott analysts upgraded their opinion of the REIT from Neutral to Buy with no mention of a price target.
The daily price chart looks like this:
From the early August high of $14.75 to the recent low of $9.50 amounts to a slide of 35% in a little more than seven months. Both the 200-day moving average (the red line) and the 50-day moving average (the blue line) are headed downward as the price keeps slipping to new lows.
Here’s the weekly chart:
The REIT has slipped below the early 2022 support level of $10.50 and is now below the 200-week moving average. You can see how the 50-week moving average is now heading lower.
Until the banking crisis is resolved and the action of the Federal Reserve on interest rates becomes clearer, buyers may continue to be reluctant about real estate investment trusts such as Farmland Properties.
Not investment advice. For investment purposes only.
Over the past five years, private market real estate investments have outperformed the publicly traded REIT market by about 50%. Check out Benzinga’s Real Estate Offering Screener to discover the latest passive real estate investments.
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