I caught up on Friday's WSJ accompanied by an epsom salt bath and tea. I was especially drawn to the article discussing the strong demand for mega ranches in the U.S. - those with typically over 100,000 total acres (with often a substantial portion of deeded acreage) listed from roughly $10 million to $175 million. (Find your mental map of the U.S. and think about New Mexico - this is where the 'cowboy moguls' are mostly flocking to). In the fiscal year of 2014, the value of U.S. pasture land normally grazed by livestock rose 11%, making property with revenue streams highly desirable. With drought conditions slowly on the upswing, higher cattle prices, a boom in the oil & gas industry and attractive interest rates on mortgages, ranches that have been sitting on the market are starting to sell.
In 2012 for instance, Billionaire Stan Kroenke, (owner of St. Louis Rams and soccer's Arsenal F.C), scooped up the 124,000-acre Broken O Ranch in Montana for a cool $132.5 million. Head due south, and D.R. Horton (founder of America's largest home building company) purchased Great Western Ranch in New Mexico for over $59.5 million, where he hopes to use the 293,000 acres as a landscape to entertain clients and made available for use by his 'key employees'. Despite the alluring qualities of entertaining and sporting on the majestically vast land, there is certainly keen interest in investing in an asset that can aid in profitability, whether it may be fracking and mineral rights, livestock operations or fees from wildlife hunting. Those billionaires might be on to something...
Read on, here.