LELAND – John M. Dean Jr. is the best the Mississippi real estate industry has to offer. So said the Mississippi Association of Realtors when it recently named Dean its 1999 Realtor of the Year.
Dean, president and principal broker of LANDMART Inc. and Dean Land & Realty Company in Leland, established his real estate brokerage in 1982, specializing in representation of buyers and sellers of investment grade farmland throughout the South.
Dean has held a number of leadership roles in state and national real estate organizations. He has also won other awards and honors, including the 1998 Land Realtor of America from the Realtors Land Institute.
The Mississippi Business Journal recently caught up with Dean and asked about his feelings on winning Realtor of the Year, and the specialized field of dealing farmland, particularly in the Delta.
Mississippi Business Journal: Tell us what it means to you to be chosen the Realtor of the Year.
John Dean Jr.: While it is quite an honor – in fact, the highest annual award given by the Mississippi Association of Realtors – it is at the same time a humbling experience to be chosen over the 4,400 other Realtors in Mississippi. When I consider the vast achievements of previous Mississippi Realtor of the Year winners, I feel that I have a lot yet to live up to in order to truly be a worthy recipient.
The real estate industry has been good to me, and being active in Realtor leadership and issues is a way for me to give back.
MBJ: Tell us about dealing in farmland, particularly in the Delta. Are there special nuances in handling Delta land over other types of property?
JD: The Delta is known throughout the world as one of the greatest agricultural regions. When the abundant prime farmland, rechargeable aquifers, lengthy growing season and relative ease of land ownership in the Delta are combined with the stability of the U.S., this area becomes highly desirable to both domestic and international farmland investors.
Because good Delta farmland can generally be leased to achieve competitive rates of return, it takes on many similarities of an investment in urban commercial real estate – but with the advantage that the property is always 100% leased.
MBJ: Have the current depressed agricultural markets had an adverse effect on dealing in cropland? If so, how have you overcome it?
JD: Since mid-year, we have begun to experience some direct effect of depressed commodity markets on farmland values and sales, although the effect, thus far, has been slight. Land values leveled off this year, and may even record a slight overall decline by year-end.
Depressed commodity prices have had a less than expected effect for a number of reasons. First, farmers generally are in better financial shape than in the previous farm crisis. Second, the U.S. economy remains strong, and interest rates are still reasonable. Third, there is optimism that government assistance may bridge the gap until commodity prices rebound somewhat. Fourth, the market for income-producing farmland continues to broaden.
MBJ: Who is buying Delta farmland today?
JD: The typical buyer for investment grade farmland in the Delta today is more likely to be an investor or a larger farm enterprise looking to expand.
The investment buyer is subdivided into the following categories: institutional investor (pension funds, insurance companies, limited partnerships); international investor (primarily individual Europeans); tax-deferred exchangers (individuals who exchange smaller, but higher priced, tracts for larger agricultural land acreage and defer capital gains tax); and, stock market investor repositioning assets.
MBJ: There are some who believe that Delta farmland prices have become outrageously expensive. Do you agree?
JD: Although farmland prices have experienced sustained increases since 1986, the values have generally not increased beyond the point where modest returns could not be achieved from cash leases. Even the best quality farmland today with a highest and best use as farmland would not sell at a value producing a gross return on investment of less than 5% from a cash lease. The average cash return in the Delta over the past two years has been from 6%-8%. This compares to a 4% or less return in Illinois, for example. Therefore, I do not agree that Delta farmland has become overly expensive.
MBJ: Is Delta farmland a sound investment? If so, why?
JD: Yes. Prime farmland is being lost throughout the U.S. at an alarming rate to development. The Delta is blessed with an abundance of high quality farmland mostly lying above a large re-chargeable aquifer. Unlike many areas of the country, there exists here a significant cadre of top-producing and well-financed farm operators who will pay competitive rates per acre to rent additional land. There is also a well-developed infrastructure to support the harvesting and marketing of crops.
As an investment, farmland is rated by Ibbotson and Associates as one of the most stable of investment alternatives and as having the highest total return over a 30-year period beginning in 1960. Several Delta-area farmland management companies exist to provide the passive farmland investor with the due diligence and management necessary to achieve consistent and competitive investment returns from leased farmland.
There is always a market for investment grade farmland.
Contact MBJ staff writer Wally Northway at email@example.com.
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