Carrus implements a well-defined and disciplined investment strategy that draws upon the experience and sophistication of our Management Team.
The heart of our investment strategy is to acquire ranchlands with significant conservation values that allow us to operate at scale in the livestock industry with diversified operations. As an investment in agricultural real estate, we hold appreciating assets that also act as a hedge against inflation and exhibit low correlation to traditional investments. By operating at scale with diversified operations, we are able to generate reliable operating income, and the participation in conservation transactions accelerates the return of capital, lowers our cost basis, and provides landscape scale conservation benefits.
ranchland can generate competitive risk-adjusted returns given the right
acquisition, operational management, and disposition strategies. Our experience suggests
that profitable ranches tend to be characterized by an intensive
business-oriented approach and attention to biological health of the land. Carrus further
believes that the current environment presents an attractive
opportunity to invest in working cattle ranches. Ranching has lagged behind crop farming in
terms of consolidation and enterprise management. Carrus intends to increase ranch
profitability by bringing operations to scale, applying intensive range
management practices, diversifying operations, and professionalizing management
across all enterprises.
A favorable risk-return profile for agricultural land is generated
by a combination of the following key attributes:
- Asset Appreciation
- Current Income
- Inflation Hedge
- Low Correlation
The value of agricultural real estate across the 17 western U.S. states
grew at a compounded rate of 5.75% between 1950 and 2010. Typical Western ranches include a mix of
agricultural land types and are often augmented by federal, state and private
leases. Carrus is confident that the national and international demand for agricultural, energy, and other
resources generated on pastureland will continue to grow in the near-term and
into the future, boosting demand for and the associated value of productive
Productive Pastureland Is a Dwindling Resource
Agricultural land makes up approximately 40%
of total U.S.
land acreage, and has a total value of $1.8 trillion. That said, it is a shrinking resource: The
U.S. agricultural land base declined by over 61
million acres, or 6.5%, between 1997 and 2007, and pastureland has experienced
a similar trend. Agricultural land has
historically been converted to higher value-per-acre residential and commercial
property as towns, cities and suburbs expand.
This growing scarcity is one factor driving stable growth in
agricultural land values.
Rising Demand for Non-Agricultural Ranchland Products and Services
Interest in non-food products and services
generated on ranchlands – biofuels, other energy resources, hunting and fishing
opportunities, protected areas for open space and wildlife conservation – is
putting additional strain on the diminishing supply of U.S. pastureland. Effectively integrating energy, recreational,
and conservation land use demands into agricultural production will be part of Carrus' strategy.