[Issuer] Alternative Equity Advisors

Alternative Equity Advisors (“AEA”) specializes in the acquisition and management of U.S. farmland portfolios on behalf of third-party investors. AEA is the asset management affiliate of Peoples Company.

Company Name | Alternative Equity Advisors

Website | Alternative Equity Advisors

Asset Type | U.S. Farmland

MIP 6 Application | [P1-DROP] MIP6 Application: AEA DROP: US Agricultural Real Estate - Collateral Onboarding / Collateral Onboarding Applications (MIP6) - The Maker Forum (makerdao.com)

Company Overview
Established in 2014, AEA offers investors customized investment strategies and comprehensive asset management services for direct ownership of U.S. farmland. AEA is privately owned and the primary shareholders are involved in the business. AEA leverages the resources and expertise of its affiliate, Peoples Company which is a leading farmland brokerage, appraiser and manager in the U.S. that operates in 26 states, for market intelligence, originating investment opportunities and identifying farming partners and lessees. Peoples Company also serves as the land manager for AEA’s assets. All farms managed by AEA are enrolled in Leading Harvest, a leading certification standard for sustainable agricultural production.

Organization
AEA is headquartered in Clive, Iowa and has a team of 10 people with backgrounds in farming, agricultural technology, farmland brokerage, finance, law and asset management. This team leverages the larger resources of Peoples Company which has 9 offices covering all major U.S. agricultural markets. AEA will establish an SPV as a limited liability company or limited partnership domiciled in Iowa to acquire Assets.

Asset Details

Asset Collateral Description
The SPV will acquire high quality farm properties that fit the following criteria:

  • Located primarily in Iowa but also Illinois, Nebraska, South Dakota, Kansas, Missouri, Minnesota, Washington and Oregon;
  • 75 - 350 acres;
  • Leased to reliable farm operators (the “Tenants”);
  • Land use at acquisition: utilized primarily for row crops including but not limited to corn, soybeans, alfalfa and wheat;
  • May be enrolled in the Conservation Reserve Program (“CRP”) upon purchase if they are exiting CRP within 12 months and will be converted by the Issuer or Tenant to row crops;
  • High quality soils capable of generating crop yields at or above crop yields in the local area; and
  • Appraisal from a licensed third-party appraiser showing market value to be at or above purchase price for the asset with improvements constituting no more than 15% of the total appraised value.

Track Record
From 2018 – 2020, AEA completed over 30 farm acquisitions on behalf of related parties or on behalf of third-party investors. Investment sizes ranged from $300k to over $25 million. AEA and its land manager, Peoples Company, manage over $500 million of farmland.

Average Collateral Size
Asset values will range from $250,000 to $2 million.

Risk Overview
There are 2 primary risks – tenant default and a decline in farm values. Tenant defaults are managed by leveraging the network of farmer relationships and market knowledge of Peoples Company to identify strong tenants. Also, farm leases are typically for 1 year with rents paid up-front. Historically, tenant defaults have not been a problem for AEA and Peoples Company. Lastly, Tenants utilize federally subsidized crop insurance products that provide minimum revenue guaranties.

The potential for land value depreciation is minimal. Land values are supported by the limited supply of high-quality US farmland, the US’s critical role in domestic and global food production and ever increasing demand for food. AEA’s approach to farmland acquisitions will further mitigate this risk due to its focus on high quality farmland and extensive due diligence on key factors including soil quality, water availability and historical production.

Disclosures

Potential Conflicts of Interest
AEA may source farm acquisitions from Peoples Company brokers. However, this will not be the only source of transaction flow. Nonetheless, in all cases, acquisitions will be supported by appraisals from licensed third-party appraisers.

Historical Proceedings
None

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