Weekend Interview: How Farmland Partners' Paul Pittman Is Growing Cash Crops For Shareholders

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When Paul Pittman looks at farmland, he sees more than dirt and crops — he sees a stable, appreciating asset class with high growth potential and market resilience. And shareholders in the public REIT he founded a decade ago in Denver, Farmland Partners, are seeing big dividends.

The commercial real estate industry across asset classes is wrestling with postpandemic market shocks, rising interest rates and inflation, but Farmland Partners is making moves and raking in significant cash. The REIT just closed on the $289M sale of a 46-farm portfolio spanning more than 41,000 acres across seven states to a subsidiary of The Church of Jesus Christ of Latter-day Saints — and made a $50M profit in the process.

Farmland Partners sold about $200M worth of farmland in 2023, still has a portfolio worth about $1B, and is shopping for more, Pittman told Bisnow during a recent interview.

The Farmland Partners REIT has distributed an average of 7% in dividends over the past two years, he said — about double the average of U.S. equity REITS. It expects to issue a special year-end dividend of as much as $1.10, according to Pittman and Farmland Partners’ third-quarter earnings report. The NYSE-traded company was selling for $12.35 when trading closed on Nov. 21.

Pittman took the time to discuss with Bisnow the evolution of farmland investing, the challenges of sustainability, and why he believes this alternative asset class is primed for continued growth — even in turbulent economic times.

This interview has been edited for style, clarity and brevity.

Bisnow: Tell us about your background and how you got into farmland investing.

Paul Pittman: I grew up on a farm and in a farming family. My dad was a school teacher, not a day-to-day farmer, but he was a part owner of the extended family farm. I spent my summers and weekends with my grandparents at their dairy farm, so I was steeped in this. I went to University of Illinois for an ag degree. But when I left the University of Illinois, I frankly got lucky and got a scholarship to go to Harvard’s Kennedy School of Government. I then went to law school at the University of Chicago. 

So I went to Wall Street, and I was a lawyer for a short period of time, but mostly an investment banker for about a decade. Merrill Lynch was the biggest firm where I worked. I was doing mergers and acquisitions work, and began buying farmland for my own investment purposes because I knew about and understood the asset class. I knew it was a good investment class. I grew up around it, so I had a kind of an emotional connection, but I really understood it. 

Over 15 years, I built up a portfolio of about $70 million in farmland, which eventually became the foundation of Farmland Partners when we launched in 2014.

Bisnow: Farmland Partners is a REIT, which is traditionally thought of in terms of office buildings and multifamily. How does agriculture translate into that typically more urban structure?

Pittman: A typical real estate investment trust owns a lot of commercial buildings, a lot of apartments, a lot of self-storage. You have to be a passive investor in real estate. I mean, you don't operate the businesses, you just own the real estate. So we took that model and took it into farmland. So we own farms all across the country — obviously less now after our recent deal — but we own properties all across the country, and we rent them to family farmers who farm and operate those properties.

The type of farmer that we have as a tenant will tend to be someone who truly pursues production agriculture as a career. These aren't hobby guys with 20 acres and five horses. In the Midwest where I am today, in Illinois, for example, they tend to farm somewhere between 7K and 10K acres. It’s a little-known fact that even though the U.S. Department of Agriculture says there are 2 million farmers in America, only about 120,000 farmers produce about 90% of the food. 

By owning the land and leasing it to production-scale farmers, we enable them to focus on what they do best while delivering returns to our investors.

Bisnow: Illinois is one state not mentioned in the press release announcing your $289M deal with Farmland Reserve Inc. Is there a reason you didn’t sell any of your Illinois portfolio, and where else are you looking as you consider new acquisitions with the profits from the deal?

Pittman: We're probably the second largest landowner in the state of Illinois today, maybe No. 1. We think Illinois is probably one of the very best investment locations in the country for farmland ownership. Iowa prevents any kind of corporate holding of farmland, so we can't really invest in Iowa because we're a publicly traded company. If I was just a rich guy like Bill Gates, I could buy everything I want. But I can't take the pension funds of middle-class people and pull it together and buy land there. 

But I’m getting sidetracked. 

We focus very much on Illinois because the soils are really good. It’s the most productive state in the country for both corn and beans, according to USDA reports, not in terms of total volume produced but in amount produced per acre. And it's No. 2 in total volume. 

Our model today is to put us more and more on the very best parts of the Delta, which means a few specific parts of Arkansas or Louisiana, maybe a little bit of Mississippi and then the heart of the Midwest, with Illinois being the most important. We’re also looking at Indiana, southern Wisconsin and parts of Missouri — that’s the bread basket of the U.S., certainly, and probably the world.

Bisnow: What makes farmland such a compelling asset class compared to traditional commercial real estate?

Pittman: Farmland is incredibly stable. It appreciates at about 5% to 6% annually, and that growth is tied to fundamentals that don’t go away — people need to eat. Unlike office buildings or retail, farmland hasn’t experienced the same sudden postpandemic shock. It’s also a highly tax-efficient investment vehicle, especially through a REIT structure, which avoids double taxation and benefits from long-term capital gains.

One thing we’re particularly proud of is the dividends we provide. Over the past two years, we’ve delivered substantial returns to our shareholders, including a special dividend last year and another this year that we anticipate being more than $1 per share. When you add that to our regular $0.24 annual dividend, you’re looking at a payout approaching 10% in some cases. Those kinds of returns, combined with the long-term stability of farmland, make it a standout asset class.

Bisnow: You mentioned traditional REITs being passive investments, but they do make property upgrades and renovations to attract higher-paying tenants and increase property value. Do you do the same thing for your agricultural properties?

Pittman: We’re passive investors by design. We don’t operate the farms on the land we own, but we absolutely invest in that land. That includes projects like irrigation, drainage and sustainability improvements, which often go hand in hand. For example, better drainage can increase crop yields and reduce erosion, making the land more productive and resilient over time.

One advantage of institutional ownership is our ability to make long-term investments that individual landowners might avoid. A 94-year-old farmer isn’t going to spend money on a 20-year project, but we can. 

Bisnow: What advice would you give to CRE investors considering farmland as part of their portfolio?

Pittman: Farmland is a long game. It’s not going to deliver 20% annual returns, but it’s also not going to collapse. For investors looking to diversify, it’s a reliable store of value, especially in uncertain times. The key is understanding the asset class. It’s not as volatile or headline-driven as office or multifamily, but the fundamentals are unshakable. And when you think about the growing global population and increasing demand for food, farmland’s role only becomes more critical.

Bisnow: What’s your bold prediction for 2025?

Pittman: Farmland values will continue to climb. That’s not exactly bold, but it’s true. The fundamentals — growing global demand for food and shrinking farmland supply — won’t change. I also expect to see more institutional investors entering this space as they look for alternatives to struggling office and retail markets.

Bisnow: What’s your favorite weekend activity?

Pittman: I’m a ski nut, which is why I call Breckenridge, Colorado, home. It’s hard to farm from Breckenridge, though, so I split my time between there and Illinois. So if I have a free weekend, you’ll probably find me on the slopes or working the farm.