Episode #470: How To Invest in Timberland with AcreTrader’s Carter Malloy & Mark Foley
Date Recorded: 3/6/2023 | Run-Time: 1:10:27
Guests: Carter Malloy is the founder & CEO of AcreTrader. Mark Foley is the Director of Timberland Investments for AcreTrader.
Summary: In today’s episode, we’re talking all about timberland. Carter starts the show updating us on the huge success they’ve had with over 128 properties and three hundred million dollars on their platform. They we dive into their expansion to offer timberland to investors. Mark covers the uniqueness of the asset class, what the opportunity set is like both in the US and around the globe, and where it fits in portfolios.
As we wind down, Carter shares what else the company is working on, including their new geospatial tool called Acres.
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Links from the Episode:
- 2:05 – Welcome Carter and Mark to the show
- 2:10 – The AcreTrader Land Investment Summit in Arkansas
- 3:57 – A recap of the last couple years of growth at AcreTrader
- 4:16 – Episode #186: Carter Malloy, AcreTrader, “I Looked At Farmland And Realized…It’s Wildly Inefficient”
- 5:33 – The scale and variety of AcreTrader farms internationally
- 8:16 – How macro-level increased inflation has impacted their business
- 11:06 – Mark’s background and journey to AcreTrader
- 12:13 – The Ivy Portfolio
- 14:36 – An overview of timberland and forestry as an investment
- 15:45 – Managing return profiles based on timber harvest schedules
- 18:35 – End products of the timber industry and why lumber prices vary so greatly
- 20:30 – How good timberland management can provide flexibility to investors
- 23:39 – How timberland and farmland offerings work on their platform
- 26:03 – Typical real-world risks in farm and timber investing and how operators mitigate them
- 31:19 – Alternative income streams that make use of their timberland
- 34:14 – Farm2Door, the online farmers’ market
- 35:19 – Carbon reduction playing into the business model increasingly
- 38:09 – The broad geography of their assets
- 42:50 – Criteria to look for when evaluating timberland investments
- 43:53 – Technology involved in the industry
- 46:49 – Their geospatial tool “Acres”
- 50:49 – How they think about portfolio construction and the benefits of real assets
- 55:06 – Some noteworthy investors and institutions involved in timber and farmland
- 56:41 – Liquidity potential for those looking to sell their farmland holding
- 59:44 – Why they’re avoiding vertical farms and cannabis farms, and doubling down on the asset classes that are working for them
- 1:02:43 – Mark’s closing thoughts on potential expansion
- 1:05:56 – Sign up for the AcreTrader email list and learn more at AcreTrader.com; Twitter; Instagram
Transcript:
Welcome Message:
Welcome to The Meb Faber Show where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.
Disclaimer:
Meb Faber’s the co-founder and chief investment Officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.
Meb:
What’s Up my friends? We got a great show for you today on a topic we never covered before. We’re joined by AcreTrader’s, Carter Malloy, who’s back for his third appearance on the show, and Mark Foley who joined AcreTrader a little over a year ago as their director of Timberland Investments. That’s right. In today’s episode, we’re talking all about timberland. Carter starts the show updating us on AcreTrader and the huge success they’ve had with over 120 properties and $300 million on their platform. That’s a lot of dirt. Then we dive into their expansion to offer Timberland Investing new investors. Mark covers the uniqueness of the asset class, what the opportunity set is like both in the US and around the globe and where it fits in your portfolio. As we wind down, Carter shares what else the company’s working on, including their new data tool called Acres. It’s sort of like Zillow for farmland. Please enjoy this episode with Carter Malloy and Mark Foley. Carter And Mark, welcome to the show.
Mark:
Thank you.
Carter:
Thanks for having us. Great to see you again.
Meb:
So, listeners, it’s been a minute, Carter, I was trying to think when last time you were on the show and the reason I realized it was longer is because I’ve seen you in person since, which was at the AcreTrader Conference in Arkansas. Are you guys still doing that? How’s give us an update? When’s the next conference?
Carter:
We are. So, we did it last November. We’re evaluating if we’re going to do it on a every year cycle or every other year cycle. Quite frankly, conferences are just a pretty big pay in the butt to put on. And so trying to determine what’s the best outcome for our investors and the farmers we work with to get together.
Meb:
Well, what’s funny because I have been to a lot of conferences in my day, try to do less. I actually just got back from one in Park City, but you guys, I was actually talking about your conference because I said you guys did a very good job of it because the right ones balance the actual content. So, you guys do a little bit where you’re talking about farm land investing and then actual social and immersion activities, because most of the panels and things people can’t really interact and mash up. But I tell people about the great secret of mountain biking in your town and one of the nicest museums I’ve ever been to. What’s the name of the place you guys held the festivities?
Carter:
Crystal Bridges. It’s an amazing spot.
Meb:
Okay, well you guys are wonderful hosts. Gracious hosts. So, if you do have it again listeners, we’ll circle. So, we know where you’re based. Mark, tell us where do we find you today?
Mark:
I’m in Atlanta, Georgia.
Meb:
And a relatively recent acquisition by AcreTrader. When did you join the crew?
Mark:
It was December, mid-December of 2022.
Meb:
Right.
Carter:
’21.
Mark:
2021, right.
Carter:
Yeah, it’s like I know you longer than that, Mark.
Meb:
So, let’s start with the catch up for those watching this on YouTube. You can see my farm in the background. We talk a lot about farming in general. We’re going to talk about a topic today that I don’t think we’ve covered in nearly 500 episodes, which is a bit strange, but we’ll get into it in a little bit. But Carter, walk us through. You guys have been a booming success. Talk to us about what the last couple years, give us an update since last time you’ve been on and listeners will put a show note link for the background episode to listen to as a prequel to this. But what’s going on in y’all’s world?
Carter:
We’ve been busy. That is for sure. So, the brief updates to today for AcreTrader, we continue to be committed to our core cause, which is connecting investors with land and doing so in a very simple fashion on easy to use website at acretrader.com. So, that is what we focus our daily efforts on, primarily being on the supply side of that equation. We’ll get into that today with timberland, but we spend most of our time and efforts as a business on finding more farmland and timberland throughout the US as well as in Australia. And so continue to be really excited about that. We’ve also grown quite a bit since last on the show with you. I think at that time we were probably 20 or 25 employees and today we’re about 125. So, it’s been a wild couple of years. We raised a series B. We raised 60 million dollars for the business itself as well to continue investing heavily in our teams and our growth. So, a lot of exciting stuff going on and very excited to dig in with you today around farmland and specifically around timberland.
Meb:
So, listeners, full disclosure, I tried to harass Carter and letting me on the cap table and I’m putting him in a headlock until he lets me do it. But I am an owner of farmland on AcreTrader and we can talk about that a little bit later. So, tell me, give me a broad overview you guys. How many farms y’all got under your umbrella now or how many acres or how do you look at it? What’s the total sort of portfolio?
Carter:
I should know the number offhand I don’t, but it’s well over 40,000 acres at this point and that’s in about 18 states here in the US and other three states in Australia.
Meb:
So, what’s the Australia decision? This seems like a hard sort of jump to make. Aus is quite a ways from here, you guys decide on that?
Carter:
It’s not physically close, but it is close to another, a number of other ways in that there are generally some really great growing climates, some great soils, we call it access to water. So, they have actually formalized water markets there. So, even if it’s expensive, you understand what you’re getting and you can underwrite it, which is really great.
Meb:
Yeah, I think if we were to do a word cloud on the first time you and I spoke the word water is probably the number one, farm, but water as a really important one. Do we have a record for the individual with the most farms yet? Because when I was at your conference and there was a Meb Faber Show listener and he was like Meb, I think I own 20 farms or something at this point, which is I was like, dude, you’re getting into Bill Gates territory. Do you have any I ballpark idea on who’s got the most of y’all’s portfolio farms?
Carter:
I do. It’s in the thirties if not forties at this point. And again, that’s fractions. So, you can do that at 10 or $20,000 per investment, whereas buying 30 or 40 actual farms, you’re right, you’d have to be on the level of a Bill Gates type investor to just have the capital to do that.
Meb:
Did I imagine this or did I see you guys are doing vineyard offerings?
Carter:
We have done one vineyard offering and hope to have more here in the very near future.
Meb:
I got to hold your foot to the fire, of all the crops. I mean there’s got to be what, I don’t know, two dozen. I mean I’m trying to think of how many, I mean obviously some rotate, so it may be corn, it may be wheat. But in general, how many actual crops do you think are under the AcreTrader domain?
Carter:
It’s definitely dozens, right? And I wish I knew the exact figure, but you’ll also have a lot of crop rotation where maybe you’ll grow potatoes one year and something different the next year. I just want to rotate between crops. So, we’re still very heavy corn and soybeans, that’s something like 60% of US farmland is in those two crops. And so we view those as very important as a part of any potential farmland portfolio that’s having this sort of core stuff there. And then I think a lot of people get pretty excited about what they see on their kitchen table and that’s usually a smaller percentage. And now again, I’m excited also to have Timberland play a part in that as well as we see lots of institutional investors and interests there. And it’s a little bit different in how, and we’ll talk about it here in a bit with Mark I’m sure, but it’s a little bit different and how it acts and walks. But that unless a very interesting investment in of its own right.
Meb:
I promise I’ll let Mark talk in a minute. But the last couple years, obviously COVID, but the macro environment, there’s been a very lifetime sort of macro event that’s occurred in the last year or two that I imagine is a positive for y’all’s world in general. But one of the big things is that for the better part of my lifetime, 45, there’s been one major regime which is interest rates declining and now and inflation declining in lockstep. We seem to be in a very different environment last two years. How has that impacted you guys as far as returns, as far as acquisitions, as far as interest in the platform? I imagine it’s been a net positive.
Carter:
I believe that’s the case, as a broad statement rates and inflation tend to chase each other around. And so we have seen outsized inflation over the last year and historically farmland has correlated very positively with inflation. It’s actually the only real economic indicator like CPI and PPI being those specific ones or asset class that we can really find any primary correlation to is inflation. Again, it’s not perfect lockstep, but as a general statement, inflationary pressures so higher inflation tends to be a positive for the underlying land and we have seen some of that more so in certain pockets than other, but it makes sense.
We grow food, fuel, fiber, structures for buildings, all the things that tend to be actual components of inflation itself as it’s calculated. And I think what’s interesting is when we look at it over the next 10 years, the setup is pretty fascinating. Inflation’s usually not, what do they call it, transitory. There’s that fun word that the fed used there for a minute and they realize that that’s probably not the case. This tends to be over larger cycles and so it’ll be intriguing to see how this plays out the next five and 10 years.
Meb:
Yeah, I went to the store yesterday and I don’t know if Amazon is intentionally trying to destroy Whole Foods, but man the experience is totally degraded but not my point. There’s plenty of great grocery stores around here, but I’m trying to make tonight the famous Zuni roast chicken. San Francisco restaurant has been doing this for 40 years, want to try to make it part of the recipe calls for pine nuts and basil or whatnot whatever. And I tried to go buy some pine nuts for the recipe last night and it was $17 and I said, look, I don’t know what this is going to add to the recipe but it can’t add $17 worth of enjoyment.
So, I told my wife to go steal some from my mother-in-law, said, can you just get a couple tablespoons? Just don’t tell her, just grab some. So, inflation, it’s definitely picking up in places. Some expected, some unexpected, but it definitely feels very, very real. Okay, Mark, you’re allowed out of the penalty box. You’re allowed to talk now. Sorry, Carter and I could just do two hours’ worth of this, but talk to us, how’d you hook up with this crazy crew? Did you know these guys for a while? What was the impetus to join AcreTrader?
Mark:
It was really the fundamental change that had been occurring in the Timberland Investing space. The institutional market had changed and a lot of the institutions were bringing the acquisition and the management of timberland in-house. They’ve gained experience over the last 20 or 30 years and it was just becoming very competitive from the standpoint of fees and just the expertise that was required. So, AcreTrader just presented a really interesting opportunity to bring an asset class that it had historically only been available to the institutions, pension funds, endowments or the ultra-high net worth investor. So, somebody with a hundred million dollars or more. And by getting back to the fundamentals of going out and looking for land, acquiring land, managing land, but for a completely new investor base was really fascinating and exciting.
Meb:
When we think of Timber land, I think in my very first book IV portfolio, I was also joking with someone this weekend who I was getting ready to have their first child. I said how many books I wrote before I had my child? I said it was five, edited two more. How many have written since? Zero. He’s almost six now. But my first book talked about timberland a lot and the interesting part is it was talking about the endowments. And so the endowments were often early into some innovative ideas that most people wouldn’t consider to be pretty traditional, partially because they were hard to access for similar mentions as farmland.
And timberland definitely overlaps on a number of these. And I said there’s a few public choices but like farmland, they’re not particularly exactly what you’re looking for. And we can dive in that to that little bit, but give us a little background. Are you new to the timber world? You’ve been doing this for a while. Did I see you cross paths with some of our former guests? We’ve had a lot of alums at GMO and a few other places. Give us a little Mark history.
Mark:
Originally from New Zealand, started out in primary manufacturing in New Zealand and Pulp and Paper. So, New Zealand’s a large agricultural economy. We have a large forestry base, agricultural sheep everywhere. And then came to the US in 2000 to work for a startup in the commoditizing marketplace arena that was around that era. And then came to GMO and worked with Jeremy Grantham for eight years in his timber group. And that was really where I really got into the asset class from a quant and a management aspect. So, Jeremy Grantham brings that quantitative expertise to analyzing data and trends and mean reversion and then the physical visiting to the property, how to put together a management plan, what are we actually looking. It was the best of both worlds. We have that field experience and then that really crunching number by program that Jeremy and his firm is renowned for.
Meb:
I was laughing because Jeremy we’ve had on the show a few times, but there used to be like the GMO asset class projections and it’s like quant, it’s various points of the cycle but today it’s kind of not great for everything but there was always timber on the right. It was like timber was the one that was hanging out and now we got emerging markets and value I think are really the standout. But I used to always laugh cause there’ll always be timber as the less volatile choice. Okay, so been at this for a while, you’ve been doing it globally. Give us, let’s do the 300 foot overview.
Mark:
Well, basically in a timber investment you’re buying a biological engine, you’re buying a commodity, a crop that is historically been grown in these regions in the US and we’re just managing it for a range of outcomes, whether that be a certain type of product that we’re wanting to target, whether it be sort term for housing construction or pulp and paper manufacturing. But we’re also just managing the biology and just trying to assist nature. We’re not really looking to change nature in any way, but we’re thinning trees, we’re replanting, we’re managing the forest, working to keep out invasive species, managing the natural environment. So, at the end of the day that’s really what we are doing for the investor and we’re getting a financial return that’s very stable, uncorrelated and its sort of the investment that you look at, you put in the bottom drawer and you pull back out again in 10 years’ time and it’s okay, I have my number.
Meb:
And so how does it work? So, from someone who’s imagining thinking about this and they buy some timberland in Arkansas or wherever and Georgia, is it traditionally where there’s one plot of land or one farm you guys are buying where hey you get one cash flow every, I don’t know, 10, 20, 30 years and that’s it or how or do you try to cull part of the forest every year? So, it’s like a consistent cash flow, how’s that work out?
Mark:
Every piece of property that we look at is slightly different. So, we could get thousand acres with 10 H classes or we could get a thousand acres with one H class. So, we need to really understand what we’re looking to bring to the platform and to the investor. So, we like to have a property that has preferably a mix of different pine age classes. So, then we are laddering our portfolio like we do a bond portfolio, so we’ve got some three year, we’ve got some 10 year, we’ve got some 15 year and some 25 year and there’s different acreage size of those and then there’s some hardwoods in there as well which are a different market.
So, our job is to really understand what we’re buying, why we are wanting to buy that particular piece of property in terms of how we’re going to manage it and then putting together a physical management plan based on our going out and looking at the property. It’s very important to go and look at the property and then to your point, we will thin a certain standard trees in year two. We will vinyl harvest some trees in year six and then we sit down and try to figure out the management of this to really maximize the return to the investor without degrading the investment in any way and having something that’s better if we decide to sell it in the future than when we acquire it and then we get into the whole area of optionality.
Meb:
I’m just thinking in terms of my AcreTrader farm, I get a cash flow each year. It’s great and I’m thinking in terms of, but the traditional row crops, you’re getting it every year, which of course going to be different than almond grove or other types of crops. What’s the broad expectations on how this fits in return, vol, all those sort of characteristics?
Mark:
I think you should think about timber as sort of fitting in between stocks and bonds but with a lot lower volatility and that primarily because that biological growth and there’s a lot of academic research that has looked at forests from the standpoint of the financial return and where that return’s been generated from. And around about 60 to 65% of the not return over a cycle of trees is coming from the biological growth. So, falls in between stocks and bonds, much lower volatility, non-correlated but correlated with inflation.
Meb:
So, as we think about this, I think a lot of listeners are probably recall of all the commodities, nothing went more haywire than lumber I feel like over the last few years. And this is from someone who just knows very little about the timberland space. What’s the end product demand? Is it housing, is it global economy related as far as paper or other products? Where are all these trees going?
Mark:
It really depends on where you are in the market in the US. So, there’s sort of five distinct regions, but at the moment we’re focusing on the US south, which is primarily housing driven with pulp and paper and wood chips exported to Europe. Now if you go out into Pacific Northwest, again it’s housing but also we have the Asia market that we sell into. Then if you go into the northeast, you’ve got your hardwoods and they’re globally traded, the high value hardwoods are sent all around the world and into the US market. But in terms of furniture or industrial products, rail ties, pallets, et cetera.
So, it’s really difficult to simplify down timber is going into one area because depending on the type of forest you’re buying, the age of the forest you’re buying is all the different markets. So, the younger trees that we take from thinning wood will go into wood chips and make pulp and paper. The second thing, larger diameter log will go into two by fours, then the larger goes into the structural lumber, the two by tens, two by eights and all different markets and all different cycles. So, our job as an investment manager is to identify the forest that makes sense but also understand where that forest fits into the current landscape in terms of the markets that we’re going to be selling that wood into.
Carter:
Hey, Mark, can you speak to on that topic as well, just speak to a little bit around the optionality?
Mark:
Yes, right.
Carter:
You mentioned earlier an example case of years two and six as years where you may go harvest some, but speak a little bit to one, the broader lumber markets and two, how they deft or even basic timber manager can take advantage and or weight through those markets.
Mark:
So, we have the ability when we own a forest to move our harvesting plans around depending on where we see product crisis and that particular region. So, wood usually doesn’t travel from the forest more than 75 to 90 miles from where we’re harvesting it. So, if we are in a situation of slightly lower prices then we have forecast, we can defer the harvesting and what we call store the value on the stump. So, you’re still getting into biological return. So, for example, think of the tree at the beginning of the year as being worth a hundred shares and at the end of the year with rain and sunlight we’ve got 108 shares. We haven’t done anything from a mention, so we just have the tree do what a tree does.
Meb:
What’s a traditional pine as far as like to maturity? Is it 10, 20, 30?
Mark:
It’s a 30 year standard rotation with some harvesting events occurring within that 30 years. So, we might do something in a year 15, a thinning operation where we remove 20 to 30% of the stems or this trunks in another thinning operation in year 22 where we remove another 20 or 30% of the stems and we’ll go out and remove what we call the sick, lame and lazy, take the trees not falling well and leave the ones that are doing really well to grow even faster and bigger. But to Carter’s point, we have that ability to say let’s do that in our, we had planned to do something in year 15, markets have changed, let’s do it in year 14 or we want to delay it to year 16. We have that ability to move the product around within the forest depending on what we’ve seen in the market from the standpoint of pricing and without degrading the return to the investor in a sense because the tree is going to be growing in that timeframe.
Meb:
Carter, are you guys still doing a similar investment life expectancy for the Timberland or is it a different match on a timeframe?
Carter:
It’s usually something similar. Our target timeframes for farmland are usually five to 10 years, sometimes 10 to 15. Timberland tends to sit in those same general buckets and I think it’s important to note that rarely are you buying a patch of ground with no timber on it. There’s often, there usually is timber and often several different cohorts of maturity within that. So, Mark and his team are out looking every day across right now what is the southern US but soon other regions as well for timberland that may fit that maturity profile for us where there’s again, multiple stands or maturities within it.
Meb:
I know you guys have had some timberland offerings go through the platform. Do you guys have any current, can you even talk about those or if not, can you give us just an overview of a property and the summary of what it looks like?
Carter:
Yeah, I’ll give an overview of the platform in general. We do one to two offerings per week and that tends to be made up of US row crops, US permanent crops, Australia now timberland as well. And so within that monthly cadence we usually do a timber product per month. Is that a rough way to answer that Mark? And maybe you can talk a little bit about what’s out there today. We don’t want to pitch individual offerings or anything, because may not be there by the time the show’s over. But as a general statement, talk about what’s on the site today and how that’s representative of what we look at Mark.
Mark:
What we like to put up on the site in terms of an offering is a property that currently we focusing on the US south, so, across 11 states we are targeting loblolly pine, it’s the major species to this region. It’s got a long history of being managed and grown for industrial wood use. We like to buy properties ranging between sort of 500 to 3000 acres in size currently that have a range of age classes. And that gets back to the ability for us to manage those age classes and associated cash flows to the best of our ability. So, we like the southern yellow pine markets, it’s the biggest market globally for industrial wood production. It’s very deep so there’s a lot of options to sell your wood but there’s also a lot of options for groups over to come and harvest that timber for us. And we just like the long-term projections of where we see this asset class in the south.
Carter:
Mark touched on a fun theme there that we probably don’t highlight enough as a business which is that 500 acre to a few thousand acres within timberland, similar with farmland works higher value per acre. We look at 100 to 1,000, maybe 1,500 acre tracks. We would call that the lower middle markets. And why that’s important is because there are fewer, if any, in the case of some of the Timberland acquisitions we’ve done, there’s certainly fewer institutions playing in those markets and so you can actually find real opportunities where there’s dislocations around pricing and or opportunities for alpha when investing.
Meb:
Yeah. Talk to me a little bit about some of the risks. I mean I feel like you most people understand, hey you could have a traditional crop like corn or wheat and weather is pretty impactful on what goes on with those crops. You get hail, they may be totally done, you get drought on and on, you get a drunk farmer does something and burns down the field. What’s the risk mainly with timberland? Like they’re so low growing, is it disease? What’s the main risk to this sort of yield and growth?
Mark:
The biggest risk that we face as a team is not understanding what we’re buying and overpaying, but from once we acquire something we face biological risks, pathogens, we have storm issues, weather becomes a big part of it. We do a lot of work understanding how forest health is when we’re looking at that property, we understand what’s trying to go on within that state with regards to pests moving around within that state. A lot of the pests that do attack forests are natural and they do go through cycles. So, there’ll be an outbreak of beetle or outbreak of … moth or something. On those lines that will impact your forest. But if you maintain a healthy forest, that’s the best defense against a lot of the natural risks. Fire is something that is a lot of people’s minds. We combat that by managing the understory of the property but also having good access and being able to get equipment in if necessary.
Fires in the south are primarily lightning, whereas out in the say California, it might be campfires or electrical issues. Again it comes down to that fire. We use fire on our properties to manage them. So, just a natural occurrence that happens with these forests and they’re designed to withstand it but it’s something that you need to do on a regular basis. Otherwise when you do have a fire on an unregulated forest, that’s where you get the catastrophic fires that you see out in California with the treetops burning and the flames jumping the fire breaks and those types of issues. So, we like to build diversification in our properties through the age classes. That’s another area that we can use to manage the risk. If we have a property that’s all one-year-old trees and the storm comes through, those one year-old trees may get tipped over but there’s a high probability that they’ll re-right themselves on their own and keep growing.
Meb:
I assume for the major catastrophe, whether it’s fire or infestation or whatever, that y’all have insurance on those or the farmers have insurance on the property. I feel like the insurance in farming in general is most one of the most well-developed risk mitigations for farmland in the US in general.
Carter:
I think it’s less so within timber than it is in farmland. Sorry Mark, speaking to the farmland side because we’ve dealt lots of insurance on that side, but the occurrences are also far less as well, whereas a weather event can wipe out a crop that is rarely the case with trees and forests. And in our case you could do things to mitigate, as an example, don’t buy something 10 miles from the coast right from the Gulf of Mexico, because you are at risk of a hurricane but a hundred miles in when that’s not … in state of Arkansas we don’t have a whole lot of hurricanes up here relative to southern Louisiana.
And likewise, to make sure to touch on a point Mark say there, we often will actively burn within the timber that’s managed on our platform and that is a very positive environmental benefit as well as risk mitigant to manage the undergrowth within these forests. Unlike, and that’s probably why you don’t hear of a hundred thousand or million acre fires happening in Alabama and Arkansas and Georgia all the time. Whereas you do hear about that in some of the more less managed places around California as an example.
Meb:
I missed the old southern thunderstorms. We don’t get those too much out here, although my God, the amount of snow we’ve been getting, we got stuck in Mammoth, I don’t even know. So, like 10 feet or something. What More do I have to say for you to subscribe to the idea of Farms weekly email, whether you’re looking for some of the top Wall Street research investment podcasts or charts about the markets we got you covered. Sign up today to receive our weekly email every Sunday and if you like it, tell a friend, visit ideafarm.com or click the link in the show notes to register today. Any links to third party websites or offered only for use at your own discretion. The Idea Farm LP and its affiliates are separate and unaffiliated from any third parties listed herein and is not responsible for their product services policies or the content of their website.
One of the things I was thinking about is, and we’ll get into portfolios and kind of where it fits in a little bit, but I was thinking a little bit about I love alternative sources of yield. So, yeah, this to me is the most straightforward asset class. If you don’t get it, it’s trees, that’s the yield. You get growth on capital gains. Do you guys ever come up with the alternative sources of yield? I mean, do you rent out the land for paintball tournaments? People have some meth distilleries. I don’t know, is it? Meth’s not even a distillery, meth lab I guess. Is there anything else you can do with these giant pieces of land or if St Joe’s comes along and says, hey, we want to develop this into some houses besides the very straight placed yield of the wood, what else makes an impact?
Mark:
So, on a piece of timberland, we’ll primarily have a hunting lease in the south. So, that gives a particular group that right to come along and use that property for hunting purposes. And that’s not a significant part of the return, but it’s a return that provides us benefits not necessarily monetary because we have another set of eyes on the property and walking and traversing that property that will see things that we may not necessarily see all the time. So, a beaver dam for example, or a cohort has been washed out or your neighbor is doing something, you should just be aware of it.
So, the hunting lease provides financial and non-financial benefits to us. We sometimes have pine straw leases use a lot of pine straw on the south for landscaping in the northeast on if we would own property up there, we could look at maple syrup taps and that can be a pretty lucrative operation. We also, we’ll have maybe out in the Pacific Northwest groups coming along and using the properties for outdoor activities, so like mountain biking, northeastern snowmobiling, trails. But again, the primary income side is the harvesting, the managing of the timber.
Meb:
I think you guys need to talk that out for the investors on your platform. Say, look all well and good, you can get this lumber farm, but hey, it’s like frequent flyer miles. It’s like we’ll send you a six pack of maple syrup or you can come hunt once a year. I imagine there’d be a non-trivial amount of people interested in some of the ancillary benefits of being a shareholder other than just to come out and stare at the trees. So, an idea for you guys.
Carter:
Mark did have a, their team had a farm on the website several months back that was growing hardwoods, going into whiskey barrel making and I was fortunately just emotionally excited. That’s not a reason to invest because you emotionally like something, right? But that’s certainly fun to see. And yes, we get pinged pretty much every single day of the week by folks asking to hunt.
Meb:
You guys, this is, you got to get a handful of interns on this for the summer. Say, all right, you’re going to build a marketplace, we’re going to be able to have all the products from our various farms. I remember looking at a software company called Barn to Door that does some of this but say, hey, you can buy the hazelnuts from here, blueberries from here, and by the way, if you want to do hunting on this, that and the other, that’s probably more of under the category of schwag. It’s not going to dictate any future outcome for you guys as far as earnings, but maybe an interesting idea. Anyway. There’s a topic that I think is interesting and I don’t know that much about it, but I would love to hear you guys talk about it too. And 2023, there was a conversation I listened to maybe about a decade ago and it was, I feel like a former Sierra Club, CEO or President, whatever they call it, was then working in the timber industry and kind of people were lighting their hairs on fire.
I don’t even remember who this may have been, but he was talking and he did a long discussion. He says the timber industry is actually fairly regenerative and then is also a big carbon sink where all the carbon that gets stored in the trees is not getting burned. It’s actually like a coal or something. It’s actually getting stored. And I never thought about it that way and it kind of flipped the switch in my head. Is carbon credit sequestration, is any of that something that is currently on the menu of potential yield or benefits or something else? Or is it something in the future you guys think about it and just talk to us in general because I know very little on this topic.
Carter:
I think Mark can speak to that one certainly more, probably break into two. One is the hard benefits of selling carbon capture and the potential promise of that. Not necessarily an underwritten one, but one we’re intrigued by. The other being the actual environmental benefits of the timber industry. So, Mark that’s probably a fun topic for you to break apart.
Mark:
We follow, we talk to a lot of people about the carbon market, carbon credits. It’s not something that we’re currently factoring into our analysis, but it’s something that we want to be aware of and when the market evolves within the US, so there’s a single US market and we have some sort of rules and regulations about what is classified as a credit and how that credit is to be transferred, we’ll be ready. But at the moment it’s around for 20 years. I remember GMO talking about it in 2001 and we still haven’t really got to that point where it’s clearly defined I think from the standpoint of being a commodity that we from a financial standpoint can say, okay, we’re going to defer harvesting, but we’re going to get this payment instead for a storage of a carbon out on the property. So, it’s something that we do follow, we do track, we do talk to a lot of people, but it’s something that is still in its infancy I think in the US. Now, Australia, New Zealand are a different story.
Meb:
Yeah. When are we going to get some New Zealand properties on the platform?
Mark:
And New Zealand, so back to Carter’s point about farming and Australia, New Zealand and Australia both have the similar situation. Very good title, very good flow of capital in and out the country. Stable governments. Very defined land tenure and legal representation and the pension funds, endowments and the … with investors have been in New Zealand for over 30 years already. The Canadian pension funds are down there. It’s very hard to go down there and find something that somebody doesn’t know anything about. From a timberland or perspective, the market is very well covered, researched. I would love to buy some in New Zealand and Australia for our investor base, but so is everyone else in the US and Canada and Europe.
Carter:
The rudest thing about this crew of people I work with, Meb, is they’ve gone on diligence trips and not taken me with them. Just find that incredibly unfair.
Meb:
Australia, I joked my friends there last time I was there I said Melbourne feels like a California city to me like San Francisco and I said, Byron Bay feels like a little town I live in, in Manhattan Beach. It was very similar. I haven’t been in New Zealand forever. I have a niece who’s in vet school there I need to go visit. So, maybe I’ll write it off by visiting a few timberland farms. Of the global timber opportunity, or you can even speak to it just in the US. Does there tend to be any better currently or historically speaking value opportunities? I mean the way I think about it, I’m like, hey look, I want to go buy some wheat land, farmland growing corn or something. Some of these plots in Iowa, I think I just saw a record per acre just across the tape recently. That’s going to be different from my dry ass piece of land in Kansas that’s not irrigated. Are there opportunities within the US, I know you guys focus mostly on the south, but give us kind of a geographical overview of what that looks like today.
Mark:
So, we have the south, so east Texas across to Florida to North Carolina. Then we have the Appalachians, which is your natural hardwoods, so the natural high value hardwoods. Then you get up into the northeast, so that would be your third market. So, New York, Maine, Vermont, New Hampshire, New York state, mixed soft wood, hardwood, natural forests again. Then we’ve got the lake states, so upper peninsula of Michigan and then you get out into the Pacific Northwest. So, Washington and Oregon. And from a timber perspective, I like my personal preferences to focus on the wet side. So, where there’s a significant amount of rainfall, they grow big Douglas fur and you have an export market as well as a domestic market. So, we sort of have five sort of markets within the US.
Then if you decide if you want to go offshore, New Zealand, Australia, very comparable to the US in terms of risk return, but you’re playing in some sense a currency. Both currencies are freely floating, stable government, stable reserve bank policy. So, you do have the currency that you have to factor in by going down to those markets and then you start to move into your more risk adjusted rate, but you are going to get a higher return, but you’re going to get higher risks. So, Central America, South America, lower East Africa, and then you are getting into Eastern Europe sort of is another market that institutional investors are focused on. But those come with tradeoffs. You’ve got potentially higher returns, but you’ve got much more volatility in your product.
You’ve got, in the case of Central or South America, you’ve got land tenure issues. Do you really own the land? How do you define that ownership? What’s the government structure like, the stability? There are situations where groups have gone into these markets and the rules have changed. Can’t get the capital out, can’t get the capital in or the forest is great, but there’s nowhere to process the wood or export the wood. There’s no infrastructure. So, it’s just not thinking about the individual property, it’s about the entire supply chain. You can have a great property, but if you can’t harvest the wood, sell the wood, it’s not really worth anything more than just a land with beautiful trees on it from a purely financial perspective.
Meb:
Has this been any impact on, is climate change a thing that even enters this equation at all or is it not so much?
Mark:
It enters the equation, especially when I’m thinking about a 30 year investment or in some cases 50 years or a hundred years in the case of the Northeast. So, we need to be aware of it. We look at where we’re buying a property in regards to its potential relationship to the coast. Historically, what’s gone on in that particular region, like forest land is not necessarily planted on prime rock land, it’s planted on very marginal land. So, the tree itself is very robust in the sense it can live through climate issues. So, significant amount of rain or a significant amount of drought. But it is something that I need to be aware of because I am buying a long term asset. I am buying something that’s 30, 50 or hundred year rotation in some cases.
Meb:
As people think about diligence in this, it seems pretty simple to me. But what other things for the listeners who are like, okay, I’m ready. I’m going to buy some timberland guys and they’re reviewing some of the offerings you guys do, and I know a lot of this, the comfort I have is that your team is looking through it. So, I feel a measure of comfort by shifting all of the responsibility to you guys. But in general, if I’m reviewing a timberland investment, anything I should be looking for in particular or think about as I’m checking it out?
Mark:
Visit the property. It’s the single biggest thing I tell.
Meb:
And I’m going to let you guys do that. So, I’m not going to visit, but let’s say I’m reviewing one of y’all’s. When you visit the property, what’s the main disqualifier? So, there’s obviously price, so let’s ignore price, and that sort of you’re like, oh no, it’s too expensive. But let’s say you visit and you’re like, oh hell no, what’s the usual top one or two disqualifiers?
Mark:
If the data that the seller has presented us does not match with what we’re seeing in the property, or it’s not been managed, so it’s very heavily overgrown, hasn’t been thinned, it has full access. So, we might be able to drive off a main road to it, but can we get out onto the property and is there issues that are apparent through the tree? The tree will quickly tell you if it’s being managed appropriately. You can tell if it’s just overcrowded. If you can’t walk into the forest, that’s an in indication that there’s something not being handled right in the past.
Meb:
Let’s talk about technology real quick. Farming to me, I think Carter and I talked about this last time, but it seems to be accelerating. I mean some of these tractors are more advanced, I feel like, than some satellites and rockets. You look, I remember riding around even when I was a kid and I was like, dude, the house doesn’t even have air conditioning. I’m like, this has not only air conditioning, but it has TVs and monitors and everything else. You got music, who knows now? I assume at this point almost no one is going to be actually driving the tractors or drones or whatever it is in a few years. So, there’s this huge efficiency technology impact. On timberland I don’t know that my guess would the impact, but maybe on the genetic basis of the seeds where all of a sudden you’re going to have trees grow faster or capture more carbon or something. I don’t know. Is there anything that you think is really on the horizon as far as technology that has an impact on this space?
Mark:
Well, from a management standpoint, we record all the activities that we’re doing on the property. So, when we’re replanting, we know how many trees per acre we replanted, the spacing, the soil quality. We track all that information. We also, from a harvesting standpoint, some of the equipment that is out there is able to take instruction from a mill. So, the mill has an order book that they’re cutting eight foot or 16 foot or 12 foot logs this week and turn it in into lumber.
They will relay that to the field and the machine operator will harvest the tree and then cut it to the required lengths in the field without having necessarily been processed once it gets to the mill, the mill’s already at the right length. And GPS, we use a lot of GPS for boundary and stand delineation. We use a lot of drones for forest health and just being able to cover a 500 acres of newly planted seedlings really quickly, a drone can get up there and at 500 feet we can see, okay, there’s an area here that’s of concern. We need to physically walk out to this particular area and see what’s going on.
Meb:
There’s a drone company I invested in called Drone Seed, but I think that’s targeting like reforestation, not actually planning and things like y’all, but they they’ve been very successful. Carter, you going to say something?
Carter:
Oh yeah, plug some technology we’ve built as well. So, we have a geospatial tool called Acres. We actually have a part on this-
Meb:
And to interrupt Carter, by the way, I was on this morning and I spent an hour and a half for no reason, just out of curiosity, playing around because there’s a free part of this listeners, and I found the Meb and tea Faber, Claude, and I dug in. I looked at my brothers and my neighbors and everyone else. This thing is awesome. Okay, keep going. What’s the domain?
Carter:
Oh, it’s fantastic. Oh, I love that. So, yeah, Acres is the name of this tool we built initially for ourselves.
Meb:
But it’s acres.co or what’s the domain?
Carter:
That’s correct. It’ll be acres.com within the coming weeks. So, we’re very-
Meb:
Oh man, who’s the squatting on that?
Carter:
Oh, I’m the only one talk about it took a year. So, that’s a whole nother podcast some other day.
Meb:
Oh, that five letter domain, man, good thing you got that venture funding. Those things don’t come cheap. All right, keep going.
Carter:
Yeah, yeah, the time was even more expensive than the dollars we invested to make it happen. But yeah, so we’ll be over at acres.com very soon. It’s at acres.co today. And that tool we built initially for ourselves today has about 40 software engineers and data scientists working on it full time. And for Mark and his team, where that’s incredibly effective is doing the initial diligence very quickly. So, finding the plot of land, understanding the bones of that land, so what are the soils like, what’s the topography like? And then being able to dig in pretty immediately and see historical satellite imagery to really understand problem areas especially, right? That’s the deal. That’s the idea of any deals. You want to find the no as fast as possible so you can spend your time working on the yeses so that mark and team are not going out to the farms that we could have discovered through our software was a no.
That also includes really cool data where all the mills are, so we’re able to, and their capacity as well. So, we’re able to target acquisition areas and be able to understand pretty immediately, hey, there’s a very real market for the product coming off of this attractive timberland versus ah, that market’s a little more dicey with only one buyer that’s 40 miles away. So, we’re really excited to apply technology of our own within the underwriting process and the oversight management process as we go to the lifecycle of these farms.
Meb:
Yeah, listeners, it’s very cool. There’s a free tier, a $30 tier, I imagine you should charge a lot more for enterprise customers, tens, hundreds thousand dollars. But it’s fun to play around with and kind of shocking how detailed. It’s like it is like a Zillow. I mean, you guys got any competitors signing in yet or what?
Carter:
There are some folks that have little point solutions in what we do, but in terms of where we’re really focused is the quality of the data. I imagine most people that are on the show have built a financial model in their lives and garbage in, garbage out. Most of the data that exists in our world is a low quality. So, I’ll give you a quick example. Inside of our enterprise tool, we have comparable sales. This sounds ridiculous, but when you buy a house, you’ve got the MLS, you’ve got Zillow, but you know what things are selling for.
Commercial real estate there’s huge, huge data sets out there. For what we do in the world of land there’s no really great organized set of data out there. So, we’re in 3,000 county courthouses. We do tons of data science around that, that we literally have a team of folks going and manually entering comparable sales that we can find online to help our teams, to help Mark and his team as an example, immediately, so again, I know how ridiculous this sounds and forgive me, but knowing your comp sales in the area actually helps you to buy, like no kidding. And that has historically been a very material challenge for folks buying and selling land is just that lack of information.
Meb:
Yeah, well, I mean, yeah, it’s still shockingly, despite all the institutional money has still been a neighborly going down to the local co-op and ask people or the local broker, that’s how you get the information. It’s really hard to find information online. To you guys, it’s pretty cool. Let’s talk a little bit about portfolios. We’ve long been a big outlier here on talking about asset allocation portfolios. We just rolled off one of the worst years ever for stocks and bonds, so congrats to all the people listening that had real asset exposure that probably really helped last year and not all real asset exposure and it not always will, but it certainly helps in a time of inflation arising inflation thinking about the seventies, the forties, et cetera.
Talk to us a little bit of how this fits in. There’s not a lot of choices. I mean, I remember in my first book talking about a couple timberland ETFs, but they’re not really timberland, so maybe it’s like private fund choices. What does it look like versus the various publicly traded ones? Because those got smashed last year. I think the ETFs were down 20%, but again, I think they’re owning paper manufacturers, processing mills, all the sort of various giant public conglomerates. Anyway, floor’s y’all’s. What does this kind of fit in and look like in the characteristics?
Carter:
So, I think both across farmland and timberland, we like the land part. And you’re exactly right, there’s absolutely nothing wrong with some of those public vehicles out there, but they tend to be also very large operating entities and own lots of production capacity. As an example in one of the cases there, the other component is that’s like why we private ownership is because Reeds and or any ETFs, public tickers in general, one, tend to be correlated and two, tend to be more volatile. And that whereas farmland and timberland has shown something like half, literally half of the vol, roughly speaking of the volatility of the S&P, it’s a pretty fascinating asset classes that we work within.
And then in terms of how people think about it fitting in their portfolio, there’s lots of third party research out there that we usually point to, whether that’s from Nuveen or Prudential, talking about hundred billion, trillion dollar type asset managers that go through and look at the underlying data. And sometimes they’ll show two to 5%, five to 10% type of allocations. We’re not in the business of recommending people allocations to their portfolio or mixed percentages and things like that. What we are in the business of is making it available to people so that they can have direct access, really good fundamental understanding what they’re investing in. What we’re hoping to do is compound capital over long periods of time and do so in a very simple and effective manner.
Meb:
Look, personally, one of the hardest, we need to update our old asset allocation book. It’s a summer sabbatical project I’ve claimed for the last four years in a row, but this summer, 2023. The thing about thinking about the asset allocation portfolio is the most balance always include real assets to some degree. And one of the most basic that we joke, it’s 2000 years old, the Talmud portfolio thinking in terms of the third in each global equities, fixed income and real assets to me is nearly impossible portfolio to beat buy and hold for investors. And the cool thing is thinking about the real assets part, what are the biggest missing pieces of the global market portfolio that is not accounted for in traditional public offerings, it’s farmland, timber, single family housing, and there’s getting to be more and more kudos to you guys and others, but those are traditionally missing.
And if they’re missing from the public market portfolio, it usually means there’s a bit of a pricing mismatch too. You need a little toggle on the acres offering to say, hey, and I don’t know if this is true yet, so it’s just a joke, listeners, I want to mark all the Bill Gates properties because now he’s going through a divorce. So, these may be going through a fire sale. I don’t think he has any liquidity problems. But anyway. So, I think a third, you guys won’t say this, but I think a third is a totally reasonable real asset exposure for the buy and hold side. Do you guys know anybody doing that? I imagine there’s some in y’all’s orbit that do a pretty heavy, farm allocation.
Carter:
There are, and we especially see that with farmers, and folks in rural America where they fundamentally understand the value and we’re really proud and excited about that. We’ll see a farmer come on from Illinois and say, hey look, I farm here locally, I love land, now I get access to land and in five other states or whatever to add to my portfolio.
Meb:
What institutions do you guys think are, I know Yale, GMO, Harvard, I mean, are there any others mean, you mentioned a couple Nuveen, Prudential, who else is really some of the big allocators or investors in sort of the timberland, farmland world?
Carter:
You mentioned some of the both LPs and GPs that are out there and there are more and more pensions, universities, endowments that are going both through GP funds, through fund structures and some that actually manage directly themselves as well. All on Harvard owning very large swaths of land and in various places. Then in the world of GPs, there are a number of scaled solutions out there. There’s quite a few funds out there. At this point they primarily are 4,000 very large institutional investors. So, we’re not competing with them in terms of the asset class or the dollars, the investment dollars, but they tend to focus on very large tracks of land and very large investors. And yeah, you named a few of the larger ones out there. Nuveen, TIA/Nuveen, the actual management vehicles called Westchester. John Hancock, part of the Manulife, huge manager out there, really great people, Prudential, UBS. There’s a big list of investors out there and we know a lot of them and generally really fun part about this industry is it’s fairly old school and it’s pretty great people working inside of it.
Meb:
Yeah, I met a lot of the names you just mentioned at your conference. So, it’s always serendipitous to be in person again to see people and attach some of those names to faces. One of the things you guys talked about in the past, so I don’t want to step on your toes so let me know where we stand with this, but I’m a cheap bastard, so one of the things that I like to think about is people that make foolish decisions and in this case it’s not a foolish decision, it’s just a personally foolish or sometimes just life intervenes. Sometimes people get sick, people die, et cetera, et cetera, but anyway, they buy something that they have to get rid of. And so look, if you’re on Robinhood, you can sell it 10 times today already.
But a lot of private investments, whether it’s crypto investors buying a bunch of real estate and Puerto Rico, whether it’s people who just got out over their skis when interest rates were zero when they bought too many farms, have you guys ever started to build out a marketplace yet where for secondary liquidity? Because you see where Meb is going with this, cheap ass Meb is like, look, can I be like the low bid? I’m going to give you just a checking account. Say anyone that wants out for 20% down, Meb will take it. Is that something that’s available or how do you guys think about any marketplace ideas? Because I’ve seen some others in the wine investing space that have started to build. Something y’all doing, thinking about, no?
Carter:
Yes, it’s something that we want to get it right from a regulatory standpoint, we tend to be very conservative in how we operate our business and want to make sure that we take that through the appropriate channels. For some context around that we’ve actually built the technology for it. We’ll likely augment that as well, pending approvals and a launch of that. But the idea around that is with any of the private assets or private securities on our platform, there’s a minimum holding period of one year as a regulatory lockup period after which today, you Meb, if you want to go sell to a friend or through another marketplace, we’re certainly happy to help you. But larger, speaking wider to our investors, that is our hope and has been our hope for a long time that we would’ve a secondary marketplace to the extent that we’ve already invested very intensely in it.
We’ve been going through regulatory applications here over the last almost a year or so and would like to make that part of it in the future. No promises that we’ll get live. There’s lots of issues with it. Here’s the biggest one, everyone is you. So, being hyperbolic, but just about every day somebody’s like, hey, is there a secondary marketplace. When it goes live I want to bid on there. And extremely rarely, literally one or two times that I’ve ever even heard of has somebody said, hey, I’d be interested in selling on there. And so there could be a buy sell mismatch on it as well. Something we’d want to be certainly very, very cognizant of.
Meb:
Well usually that clusters too, it’s like you go through an entire regime of 10 years of bull market in the US post-financial crisis, but then something like you get clusters of people or in 2008 would be an entire economy, but other times like 2000, 2003 or right now, who’s upside down? Well, it could be a lot of the tech or growth investors that are down 90% or something and I doubt they diversified into farmland intelligently, but they might have, so who knows? What else as we look out over the horizon, guys, you guys have had some pretty amazing success. What are you noodling on? What are you thinking about? Is it cannabis farms? Is it vertical farming? What else is on y’all’s brain these days? Is upper AcreTrader or just the world in general?
Carter:
Sure, I’ll be specific too. One of them is resisting those kinds of things. So, vertical farms and cannabis farms can be explicit about or tokens. It’s the same with the demand of the secondary marketplace. Every day somebody’s asking to invest in those kinds of things and we have seen lots and lots of cannabis specifically like the hemp actually when that became a real big thing, whatever three years ago, four years ago. And look like we as a business and is, I think you have to be cautious of business like the old Goldman Sachs motto or an unofficial motto of long-term greedy. As a business, as a marketplace ourselves, we know that it would run up revenue and be interesting to put up cannabis farm. No is a strong statement but we’re pretty sure tons of interest, but it’s a total wild west and we want to be really cautious of exposing people to those types of investments. Vertical farms are the same. There’s some really killer applications of that. Growing microgreens close to where you live.
Meb:
Pine nuts, got to grow some pine nuts.
Carter:
Pine nuts, right? $8 an ounce, whatever.
Meb:
70, yeah, I don’t know what it was per ounce, but $17 for the smallest package I’ve ever seen in my life.
Carter:
That’s intriguing. But invert that for a moment of, for vertical farming, the most expensive things usually they’re dealing with are that electricity for light and water and us old school folks over here in horizontal farming-
Meb:
It’s free.
Carter:
Those things are free usually. So, again, interesting niche applications. Both those cases are places where the market is not yet well enough developed for us to feel comfortable participating.
Meb:
I mean it reminds me, you mentioned, it reminds me of Buffet like the analogy he gives, which consistently on a daily basis I have to think about because I get attracted to every shiny object business idea out there and I can get rid of that with my startup investing. I scratch that itch, but whatever was, the top 10 things you want to achieve or on priority list and he is like move four to 10 to the right side of the paper and then just scratch them off and just focus on the top three. So, the no’s are just as important as you mentioned but keeps you out of trouble and distracting is a very real part of the brain damage. But what are you guys thinking about or what are you considering that might be curious or interesting that you can peel the, let us look into the future with you guys?
Carter:
I too have that shiny penny problem where just, and especially in our world of land and agriculture, there’s just so much opportunity to improve and do better and do better by your customers. For us it’s really about doubling down on what works well, which is helping farmers to raise capital and helping investors add farmland to their portfolio. The largest updates within that are one, this Acres platform that we’re now taking live and we’re really, really excited to help move the industry along with that. And the other is we’ve applied for some regulatory licenses that allow us to work even more closely with the supply side of our business. So, with the farmers as an example. And that’s something that we’re excited about the opportunity, the potential there to have an even greater impact of bringing investment dollars into rural America.
Meb:
Yeah. Sweet. Mark, you got any more thoughts as we’re starting to wind down here? Anything you’re thinking about as far as checking out all these properties or anything on the future of what you guys are thinking about?
Mark:
We’d love to bring some new regions to the platform. So, Pacific Northwest.
Meb:
Is that sort of the Napa of timberland world? I feel like whenever I think of timberland, I think of Pacific Northwest for some reason.
Mark:
It’s interestingly one of the few places that I have more requests from AcreTrader people to visit with me when I go look the property. No one wants to come to see Alabama when it’s 110.
Meb:
Just during football season. That’s when you just got to tie these into the right time of year.
Carter:
Yeah, we’re from Arkansas, we specifically don’t like Alabama, so that’s our …
Meb:
Yeah, yeah, yeah. Okay, that’s fair.
Carter:
And then the Northeast just, we want to bring these established markets to the platform so investors have the ability to choose and build diversification. So, Pacific Northwest, Northeast, Appalachians, and again just with the south being that core piece to start with, but we had an offering in Arkansas that was all hardwood land. It was just a unique situation off market and it was gone in three days, because the…
Meb:
/// some innovation on the wood technology market in general where some of these producers are kind of putting together some new wood composites that sort of are more sustainable but rival like the structural components of steel, et cetera. That’s interesting to me.
Mark:
And that’s a big part of where we see the long term nature. Again, we’re getting back to the situation. This is a long term asset. The industry is long term. So, to your point, the structural replacing of steel and concrete with laminated lumber that stores the carbon, has lower energy input to produce that wood, that’s less disruptive to the neighborhood when it’s being constructed. You don’t have 50 or a hundred cement trucks turning up. You’ve got a period of time where the building comes along in a kit form basically, and it’s assembled and it’s built. There was one just built less than a mile from my house here in Atlanta and it was up in three or four months. All prefabricated structural lumber beams.
Meb:
Gentlemen, this has been a whirlwind tour. Anything we missed, anything we need to talk about and we knew we can go down to? We hit a lot.
Carter:
I think we covered it. I mean I always try to not be pitchy on your show. It’s like how do you do it? It’s easy or creative accounts, but outside of that we’re good.
Meb:
Well, to the listeners out there, I would suggest one thing to do and that’s to whether you’re going to buy it or not, sign up for the AcreTrader email, because I get a handful of these and you can set it up so it goes into a Gmail folder so you don’t even have to see it every day, but it’s fun to sort of voyeur and I do it with Masterworks on art, I do it with AngelList on investing, on and on, because I at least like to see and I like to review.
And then once you start to review, I feel like enough, I think I’m over well over 10,000 pitch decks for example, on the angel side, you start to do some tying the dots together, understanding the verbiage, you learn a lot. And so it’s kind of fun to see wait, blueberry farm, well hold on Australia. Anyway, sign up and at least start checking out the offerings. It’s a lot of fun to read them and kind of get your boots dirty on the farm. Gentlemen, all right, so we can find you at acres.co, AcreTrader, soon to be acres.com. Where else can we find you guys, what you’re up to? Are those the best spots?
Carter:
Yeah, we got great teams online, so AcreTrader.com also just has lots of great content on it, so there’s a lot to consume there, to go even if you don’t want to invest just to go learn about it. It’s fun to know where our food comes from and where our paper and timber products come from and we’ve got lots of great free resources there.
Meb:
I don’t know the answer to this, but do you guys have a AcreTrader Instagram TikTok presence yet? Or have you joined the 21st century?
Carter:
I don’t. I have no idea how those things even work. Oh, but we do have presence in all those places for sure.
Meb:
Oh my God, you guys got all sorts of followers on. I mean, the farming community is a lot bigger than people think. Very cool. Well, AcreTrader’s on Insta. I don’t know if you’re on TikTok. We’ll see. Gentlemen, thank you so much for joining us. It was a blast catching up.
Carter:
And great talk to you as always, Meb. We appreciate you.
Meb:
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