Smart Money Back in the Market

After a three year slow down in the ranch land market, significant activity has returned as indicated by several substantial sales which occurred in the last twelve months.

Ron Morris of Ranch Marketing Associates represented the buyer in the sale of the 290,000-acre Bell Ranch in northern New Mexico – the largest single sale of blocked-up deeded ranch land to trade in over half a century – which was initially listed at $83 million.

In Montana, the 34,000-acre G Hanging Dash Ranch located near Twin Bridges and listed at $32.5 million, sold to a Boston, Massachusetts private equity investment firm. Billionaire Tom Siebel’s 62,000-acre N Bar Ranch – located 100 miles north of Billings on the edge of the Snowy Mountains and listed at $45 million – was sold to an oil-drilling equipment maker. The 16,680-acre Saypo Cattle Company in Choteau, Montana, originally listed at $24 million, sold to an undisclosed buyer who is rumored to be a Wall Street executive. The 18,500-acre Sun Ranch in Madison Valley, listed at $42 million sold to the CEO of multi-national mining company

Several large sales also took place in California and Colorado. The 6,400-acre Oak Ridge Ranch, in California’s Carmel Valley, a cattle ranch rich with wildlife was listed for $16.9 million and sold to the family of the CEO of an oil and natural gas company. In Colorado, the 3500-acre Bootjack Ranch near Pagosa Springs was sold for $46.5 million to a Texas energy billionaire.

The recent sales activity in large trophy and investment grade ranches demonstrates that “smart money” is back in the market. Several factors have contributed to these investments.

The stock market recovery has restored wealth and confidence to many high net worth players. Economic and cultural uncertainty has many people looking for a safe haven, not just for their assets but also for their families. Most ranch buyers also appreciate the legacy potential – the ability to control, enhance and maintain the land, sometimes in perpetuity. Lastly, rich agricultural land with the ability to produce food offers a return that will keep up with inflation in almost any scenario. Appreciation can be expected and risk is low.

Properties of interest to investors will be high quality and priced realistically. During the unstable market of the last few years, prices rose to unsustainable highs around 2006 and some ranches traded at half their prior – artificially inflated – sales prices since then. But quality properties and those with desirable features such as rivers have held their value due to the scarcity of such land in the west. As recent sales indicate, record low interest rates and low rates of return on many alternative investments make ranch land a competitive investment.

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