Risk management is an integral component of Ceres Partners’ investment strategy. Overall, risk is reduced through large cash down payments on all purchases which results in a very low leverage ratio of roughly 1:1, meaning that on average fifty percent of all properties are paid for in cash.
Risk is also reduced through diversification across the entire portfolio including farm properties, lease terms, tenants and financing sources.
Diversified Farm Properties:
1. Geographically farms extend 400 miles from north to south
and 450 miles from east to west.
2. Farm soils vary from heavy to light with irrigation on the latter.
3. Farm sizes vary from 20 to 1,800+ acres
Diversified Lease Terms:
1. Over 95% are low risk, cash rent leases
2. Crop share leases on lower risk farms (i.e. irrigated or rich soils)
3. Maturities are staggered with annual and multi-year leases (3-5 yrs)
4. Flex leases with a base pay and price/yield bonus participation
Diversified Farm Tenants:
1. Extensive network of farm producers
2. Property acquisitions targeted for best tenants
Diversified Financing Sources:
1. Large regional or national banks
2. Small local banks
3. Insurance and finance companies