Location: Wyoming
Target Gross IRR: 15.6%
Asset: 596 acres, pasture land
THE OPPORTUNITY
Farmland Capital is offering investors the chance to gain exposure to a highly diversified ranch operation in eastern Wyoming. Mike and Erin Galloway have been long-time Farmers Business Network (FBN®) members, who have used our products and services to help grow their operations and impact in their rural community. With the Farmland Capital investment, they’ve built a path to long-term ownership of their land, stewarding it for years to come.
With a target IRR of 16%, participating in the Galloway Ranch offering is a great opportunity to access the farmland asset class while supporting experienced ranchers and diversifying by geography and crop type.
Erin and Mike Galloway operate the ranch, along with a direct-to-consumer meat business and YouTube channel, with their family. The Farmland Capital transaction helped finance the purchase of land from Erin’s mother at a below-market-rate price. Learn more about the Galloway's long road to independently operating their ranch in this video.
HIGHLIGHTS
Exclusive access to high quality asset:
Off-market transaction on an underlying asset that was not for sale on the open market
Soil quality rated above average for the county
Potential appreciation:
The Farmland Capital structure optimizes farmland appreciation
This deal has a target IRR of 16%, driven by attractive entry price
Mission driven structure:
Intergenerational transaction in order to keep land in the family
Enable Galloways to continue owning and operating in their ranchland, stewarding it for future generations
THE RANCHERS
The Galloways have been building a business ranching their land in eastern Wyoming with their children for over 15 years. The path to owning and operating land themselves was a long journey (more info here), where the Galloways didn’t qualify for many standard farm financing options. Erin and Mike were drawn to FBN’s innovative Farmland Capital product to diversify their total financing needs and reduce interest costs, using proceeds from the investment to purchase land from Erin’s mother.
The investment opportunity is to gain exposure to the underlying agriculture land and its appreciation potential. Additionally, the Galloway’s income stream is well-diversified across their direct-to-consumer, recreation and hospitality, an on-site ranch store, and content sponsorship endeavors. Investors have a chance to get to know the Galloway family and their ranch through their website and extensive library of content; more info can be found on their website and YouTube channels: https://www.ourwyominglife.com/ and https://www.youtube.com/@OurWyomingLife.
THE STRUCTURE
The investment is structured as an option on the change in farmland values and does not participate in annual farm cash flows, shielding investors from any short term changes in commodity prices, or weather and/or operational risks. At the same time, Farmland Capital investors participate more in the appreciation of the farm. In our structure, investing 19% of the land value entitles the investor to a 62% share of the change in farmland value over time.
Farmland Capital investments are therefore a straightforward bet on the long-term appreciation of farmland in this country. We expect the availability of high quality farm and ranch land, such as what exists on the Galloway ranch, to decline over time as real estate pressures expand, therefore increasing its value.
VALUATION
Historical farmland annual appreciation since 1940 in Wyoming has been 6.2%, above the national average. The entry value reflects a valuation comparable to farms of comparatively worse productivity in the area, offering investors potential upside on the exit. This co-investment was valued in 2022 in an appreciating market. Improvements on the property (including a home, utility sheds, and loafing shed) are included in the investment and discounted based on useful life and depreciation.
*Avg. Land Appreciation for row crops: https://quickstats.nass.usda.gov/
**Gross IRR and MOIC. Fees include closing fees, annual operating expenses, structuring and management fees, and carried interest. All annual investment expenses are paid up front. Five years of management fees are paid up front (on a discounted basis), with the remainder paid out through distributions at the end of the term
+ Total Gross IRR is capped at 18% during the first two years to incentivize a structure that shares value across owner and investors
Forecast Farm appreciation is lower than annual land appreciation in all cases because of the built-in expectations for depreciation of included improvements. Actual farm appreciation values could differ based on actual value of improvements at exit
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