Examples of completed deals in 2019
Dear Clients,
This is in response to frequent inquiries about the resulting gross margins on agricultural land trades executed to cover client returns in real investments or cash management.
We are often asked how it is possible to offer an investment appreciation of 12% p.a. or higher and keep the entire investment model profitable over the long term.
To get a basic idea of what active agricultural land trading can look like, we illustrate examples of our Portfolio Manager's executed trades in 2019. This gives clients a closer look into the "business kitchen" of the company.
We deliberately chose 2019 because of the stagnation of demand and balanced supply, which were reflected in a year-on-year increase in market prices of land across the country of "only" 1.3% (farmy.cz). From the examples of the transactions documented, it is clear that it is possible to achieve a much higher appreciation (gross profitability) than the average annual increase in market prices through proper land selection (parameterisation), detailed knowledge of demand and market prices.
The long-term results are confirmed by the large number of completed transactions, which alone determine the real market price and thus the resulting gross profit. We adapt our trading strategy to the macroeconomic and monetary conditions of the period. However, in the long term, we maintain a gross profitability of 20-30% p.a. and adjust our land selection and entry prices for purchases accordingly. We have already published the gross profitability levels for land sold within APF GROUP for 2021 (29.24%, note gross profitability is calculated on the purchase price of the land). We are currently compiling the results for 2022, which we will inform you about.
There are many would-be "experts" in the market for agricultural land trading and guaranteed "market price experts" or various types of analysts. If someone works in the real estate business, it does not mean that he is an expert in trading agricultural land, unless he specializes in it for a long time and does a high number of real transactions. Often, farmers themselves are not experts in land trading as they only buy land in their action radius and directly from tenants who have no idea what the real market price of the land they are selling to them in this way is. The confrontation with the real market price is then very uncomfortable for them.
So if you are looking for an expert, ask how many deals he has completed and with what results. You can judge by that whether you are getting appropriate answers or just "amateur" assumptions and opinions. The APF GROUP honours the principle that every published figure must be substantiated and therefore realistic.
Practically, we are able to provide you with evidence of every transaction carried out within the Group (purchase contract purchase - purchase contract sale). The total number of trades executed by the Portfolio Manager exceeded 1500 and the total amount of CZK 900 million.
If you have any further questions on the subject, we will be happy to answer your questions.
Thank you for your trust and cooperation.
