Investment Company
Investment Outline
OBJECTIVE: FFCIC leverages its skills, relationships, and experience to identify, analyze, acquire, manage, and dispose of opportunistic agriculture investments. FFCIC targets value-add opportunities that include but are not limited to off-market real estate transactions, note purchases, bankruptcy acquisitions, pre and post foreclosure assets, mis-managed properties, opportunistic lending, and other distress related agriculture opportunities. FFCIC employs a dynamic approach to each potential investment and formulates multiple acquisition and resolution strategies to maximize returns.
OPPORTUNITY: FFCIC offers investors the opportunity to participate in its Agriculture Investment Program (AIP). While each specific deal within the AIP is a different and independent transaction, the same underlying principle of maximizing the asset’s return in the timeliest and most efficient manner possible governs each transaction. Each investment will have a detailed budget and prospectus for the investor to review before committing to invest.
INVESTMENT REVIEW BOARD: (“IRB”) FFCIC’s Investment Review Board has over 100 years of combined experience in Agriculture Services, Commercial Real Estate and Financial Services. The IRB was strategically assembled in order to provide the most comprehensive deal sourcing, review, analysis, due diligence, asset management and disposition available in the market today. Each member brings a unique set of skills and experience to the IRB. All of FFCIC acquisitions / investments are presented to the IRB by one of the IRB members and must be approved by a two-thirds vote of the members.
STRUCTURE: Managed accounts are available for investors with our securities partners. Additionally, FFCIC has an escrow account with the securities partner for investors to deposit into, 1) once due diligence is complete, 2) the IRB has approved the acquisition and the earnest money is to go hard and 3) the new LLC will be formed with investors interest secured prior to closing. Investors would then either have the managed account manager transfer their funds into the escrow account from the managed account by the securities partner and/or wire the proceeds into the escrow account from investors other accounts.
FFCIC sets up a separate LLC for each property where the investors have a hard asset membership interest along with FFCIC. The same project budget and prospectus that is provided to the investors is also provided to a third-party CPA firm to follow the approved performance and budget, administer checks and provide complete bookkeeping and accounting of all budgets and transactions for FFCIC and the investors.
INVESTMENT DISPOSITION EXAMPLES: One disposition option would be based on entering into a short sale, deed in lieu and/or loan buyout from the landowner for 60-70% of the value followed by a purchase or a lease back to the tenant. Under this approach, FFCIC secures the former landowner as a tenant or purchaser, depending on the structure, then at the appropriate time secure funding for the tenant for 60-90% of the value of the land. This can be structured so that we stay in as an equity partner for the 10-40% building up our land holdings with our profits.
Another option would be where the landowner is not a farmer or is otherwise not staying in the deal and/or we determined we do not want to keep them in the deal. In these instances, we would sell the land straight out or at auction to a new buyer and take our profits and move on to the next deal to reinvest in.
INVESTMENT OPTIONS: FFCIC has established multiple structures within its program in order to maximize each asset’s income potential. Some deals require more repositioning than others and some have more in place cash flow than others. Additionally, the specific risks and rewards associated with each deal are taken into consideration when determining which structure will be applied to each individual investment. Lowering cost, increasing yields, income, and capitalizing on unrealized income sources are just part of the process involved in materially increasing the value of the investment.
All FFCIC investments within the AIP will target a rate of return that corresponds to one of the three investment options offered to participants (net of the FFC Management Fee). The IRB will not consider an investment for the AIP that is not expected to meet this criteria. While some transactions will not produce that return immediately upon acquisition, FFCIC will expeditiously execute the asset specific business plan in order to stabilize, add value and monetize the asset.
Interest Only Option: Participants shall be entitled to an agreed upon annual fixed rate of return. This fixed return shall be paid annually, and any balance between anniversaries shall accrue and be paid first from the rent income or net proceeds at disposition or recapitalization of the asset. With the exception of the fees set forth below, the investor shall receive the agreed upon return on investment first before FFCIC would be entitled to any of the net proceeds.
All Growth Option: Participants shall be entitled to an agreed upon percentage of profits as a predefined percentage of the net profit of the transaction from rent income and disposition or recapitalization of the asset. With the exception of the fees set forth below, the investor shall receive the agreed upon percentage of profits on investment at the same time FFCIC would be
entitled to any of the net proceeds.
Dividend w/ Growth: Participants shall be entitled to a return/dividend from the rental income of the investment. This return/dividend shall be paid annually and any balance between anniversaries shall accrue and be paid first from rent income or the net proceeds at disposition or recapitalization of the asset. In addition, participants shall be paid an agreed upon percentage of the profit from the disposition of the asset. In those instances where the asset isn’t providing sufficient cash flow in order to make a distribution/dividend to program participants, those amounts shall accrue and be paid first from the net proceeds at disposition or recapitalization of the asset.
The expected preferred rate of return will be determined by the individual asset. The portion of the participant’s equity participation is to be the agreed upon percentage of the net proceeds (after the preferred return has been distributed). With the exception of the fees set forth below, the investor shall receive the targeted minimum fixed return/dividend on investment before FFCIC would be entitled to any of the net proceeds.
FFCIC FEES: FFCIC shall be entitled to a fee upon the acquisition and disposition of an asset into the AIP either as a real estate commission or comparable which will be in the investment budget and prospectus for each investment. This fee shall be considered earned and paid at either closing. FFCIC shall further be entitled to an annual asset management fee comparable to industry standards all of which will be in the investment prospectus and budget for each investment.