Call it a hunch, but THE STORY DID not jibe. I scanned the headline for the umpteenth time and then read and reread the pertinent details. Something was missing. Either that or I had a screw loose.
According to the Tri-City Herald, a 14,500-acre swath of choice Eastern Washington farmland in the Horse Heaven Hills of Benton County had just traded hands for almost $171 million. That’s a ginormous deal, one that pencils out to almost $12,000 per acre for a whole lot of acres. Pretty pricey dirt, right? That’s exactly what I thought. Especially when it comes to row crops like sweet corn and wheat, which were grown in rotation with potatoes on 100 Circles, which is the name of the property that changed hands.
Then again, farmers and investors in the Mid-Columbia River market expect to pay $10,000 to $15,000 for good ground. Anyone who has ever studied the Columbia River Basin knows that the tillable acreage there is coveted ground, a geologic wonder. The soil profile and underlying silty loess are in a league of their own.
I had gained this smidgen of geologic proficiency while researching our 2018 Farmland Deal of the Year, Weidert Farm, in neighboring Walla Walla County. One of the most telling moments in the field that summer came when a soil scientist by the name of Alan Busacca grabbed a shovel and stepped into a 10-foot trench that had been ripped open on the farm by a Caterpillar 336. Dusky layers of silt and sand towered over the 6-foot-tall retired Washington State professor. There wasn’t a rock, let alone a pebble, or even a root to be seen in the soil. Busacca was in his element: It was some of the richest farmland in the Lower 48. And from an agricultural perspective, the region surrounding Walla Walla and the Horse Heaven Hills has evolved into a commercial hub, complete with controlled atmosphere (CA) storage, state-of-the-art transportation infrastructure, and ready access to low-cost hydropower.
These are a few of the reasons why savvy investors have been plowing millions of dollars into farmland on both the Oregon and the Washington sides of the Columbia River Gorge. At current valuations, it’s one of the nation’s best farmland opportunities. In 2018, when 100 Circles sold, it was even better. More often than not, farmland sales involve hundreds of acres. Thousand-acre transactions — such as the sale of 6,000- acre Weidert Farm to Farmland L.P. two years ago and the 6,175-acre Broetje Orchards acquisition by the Ontario Teachers’ Pension Plan last year — are blue-moon events.
Tens of thousands of acres? Only sovereign wealth funds and institutional investors can stroke a check for tracts in that league, which is exactly what occurred on the sell side of the 100 Circles transaction: The seller was John Hancock Life Insurance, a multibillion-dollar asset manager with key holdings in all the major U.S. markets as well as Canada and Australia.