Randy Shelton Interviewed by “City Streets and Country Roads”

Hall and Hall Partner Randy Shelton was interviewed by “City Streets and Country Roads.” He discusses the ranch real estate market and Hall and Hall’s history at the 14:45 mark.

City Streets Country Roads – Real Estate from Community Seven Television on Vimeo.

Demand for Large Ranch Properties Remains Robust

By: B Elfland

If there was any question about the growing strength of the ranch market, little doubt remains. Momentum experienced in 2014 carried through the first quarter of 2015 as numerous properties went under contract and sold. This activity spanned market segments and includes several ranch properties which were listed in the $15 to $25 million range. In Montana alone, four different ranches of this size/price within 90 minutes of the town of Bozeman have sold or gone under contract within the last month.  And there are at least three additional large ranch sales Hall and Hall is actively negotiating at this time.

Why are so many deals getting done this spring? A couple of reasons. First, pricing has come down to meet demand. Many of these ranches have been on the market for some time. Prices have been reduced and buyers see the market as upwardly trending. When an upwardly trending market meets the price curve, many investors see it as a good time to buy.

Secondly, recreational demand has risen. This trend began taking shape in 2014 when amenity buyers began entering the marketplace, which had previously been largely driven by agricultural production and return on investment. The 10,000 plus acre ranches that are trading in today’s market tend to still have  a significant agricultural component, but the sales have been driven more by strong recreational amenities, such as the quality of the elk hunting or trout fishing. Clearly, the current market for large landscape ranches is attributing long term investment value to the unique recreational resources that these properties offer.

So what does this mean for buyers and sellers in the marketplace? For sellers, the environment is vastly improved. There are active buyers in the marketplace, values have come up, and there are sales to support current values. For buyers who see the market on an upward trend, this is an opportunity to enter the market on the front end of that trend.

Tight Supply in Western Ranch Market Underpins Positive Price Momentum

By: Mike McDonnell

Demand for larger ranches for sale and productive cropland generally outpaced supply in 2013. In the later part of the year many real estate professionals and economists predicted a softening in land values brought on by increasing interest rates, tightening margins and declining commodity prices.

As we move into the second half of 2014, interest rates remain near historically low levels through the slow economic recovery. While tapering bond buying efforts, an anemic economy continues to hamper the Federal Reserve’s ability to move the fund rates.

Declining grain prices are expected to strain farm incomes with the USDA predicting a 26.6 percent decline in net farm income in 2014 from 2013. While well below the historic levels reached in 2013, at $95.8 billion, the 2014 net farm income forecast remains $8 billion above the previous 10-year average. Falling corn and grain prices equate to lower feed cost and increase profitability for cattle producers.

The IX Ranch runs a cattle herd of 4,300.

The IX Ranch runs a cattle herd of 4,300.

The combination of economic conditions and elevated cattle prices has pulled on an already tight supply of quality ranches in 2014. Demand from recreational investors has remained steady adding to demand for productive ranch properties. Increased earnings have, in some cases, made owners reluctant to sell, creating additional supply constraints.

While scenic retreat properties remain below the levels experienced prior to the economic downturn, tight supply has generally created steady appreciation and positive price momentum in the market for quality working ranches. A continuation of this trend is expected as interest in available properties remains high.



Ranch and Farmland Market Trends Fall 2013

In our current inventory, there have been 39 recent price reductions. There is a continual  stream of price reduction notices being publicized by other brokers. Within Hall and Hall’s transactions, we have seen a steady decrease of the spread between contract prices and asking prices. This spread has gone from 22% in 2010, to 18% in 2011, to 9% in 2012 and 5% YTD.

Unfortunately, we have seen very little showing activity on properties with pricing that falls outside the strike zone. If a property is perceived as over-priced, it tends to languish. However, a continuing positive development is that there has been a marked increase in sales activity below $5 million in the retreat market. This is a segment of the market that has been very flat in recent years.

In talking to our colleagues in the business, it seems that sales volumes are going to be off across the board this year. Buyers are exceptionally aggressive right now with a high percentage of negotiations failing in the beginning stages over price. The general feeling is that we are in the process of establishing a base-line for prices and that activity is pretty well balanced between buyers and sellers in the active portion of the market.

The bright side of the picture is that there are indeed buyers in the marketplace and when they find a property that fits, they will pull the trigger and deals are being made. The resort markets like Jackson, Steamboat, Bozeman and Sun Valley have all seen upticks from the beginning of 2012 when the bottom was reached. Since then, legitimate traction has been reported in all of these markets at all price levels. Historically, this has been a good lead indicator for the retreat markets in the outer-lying regions as well.

The traditional agricultural markets have been strong, bolstered by solid commodity prices and the desire from the market to place capital in income producing investments. The challenge has been in finding product, as this market has been tightening for several years now. Actively marketed working ranches currently are being offered at 25% or more over the last comparable sale, but buyers have not been willing to play at these levels.

We are very excited to be bringing two major farm and ranch properties – Hager and Bliss – to the auction market this fall. These represent great opportunities for operators and investors alike.

Farms & Ranches For Sale: Market Trends

by: Jim Taylor

We are amid the main marketing season and remain optimistic on all fronts. Our markets generally parallel the overall economy, which means we are seeing some of the same growing confidence that the equity markets have exhibited. The economy is on a positive path, but there is not so much confidence that companies and business owners are leveraging themselves to build capacity and take on new employees. Our markets generally reflect this same level of caution.

Many in the private equity world are now able to monetize some of their investments that have languished for more years than they would have liked. This makes everyone feel good, although some lament that it is difficult to figure out where the next round of deals will come from. Overall, there seems to be a fair amount of money chasing a pretty limited number of deals. Certainly, the stock market setting new records is creating some optimism.

Continued low interest rates are forcing people to look for alternative investments. Farms and ranches for sale – even recreational retreats – are very much on their radar screens. The combination of a good inventory of potential acquisitions and a relative lack of conviction in the overall health of the world economy continues to keep prices pretty stable on all fronts-with the exception of farmland values which appear to have cooled off a bit.

The Elk Horn Ranch is a 160± acre parcel of land situated inside the 13,600± acre Yellowstone Club, the world’s only private golf and ski community.

There has been a fair bit of press recently about wealthy foreigners accumulating very high end homes and apartments as places to park capital. These individuals have been paying very high prices, but appear to have been wise in selecting properties with unique qualities that will sustain their value going forward. While these investors are not necessarily moving to this country permanently, it seems that they can picture these properties as a place they could easily live. Ranches and rural real estate generally remain a bit of a stretch for these types. 

However, the concept of investing in a unique asset  that is not easily duplicated – like a penthouse overlooking Central Park in Manhattan – is the same theme that underlies investment in rural real estate. It is what drives the concept of “investment-quality.” If you look at the three most expensive properties currently in our inventory: Winding Stair – one of the largest and finest ranches in Oklahoma; Grizzly Creek Ranch – an absolutely spectacular ranch literally on the boundary of Yellowstone National Park; and Elk Horn Ranch – one of the only ranch sized properties in Yellowstone Club  —- the message is clear.

Grizzly Creek Ranch is a rare and highly scenic 1,967± acre block of deeded land that lies virtually contiguous to Yellowstone National Park northwest of Gardiner, Montana.

Sam Byrne spoke to a group of friends and clients in New York about Yellowstone Club, which his group owns. He is projecting they will be sold out within 6 years. At that point, ownership of one of the best properties in a successful and sought after club will become virtually priceless. In the same vein, the uniqueness of Grizzly Creek and Winding Stair speak for themselves.


Hall and Hall Discusses Ranch Real Estate at NYC Events

Scott Shuman, Jim Taylor, Tim Murphy and John Pierce engaged in a full on assault on Manhattan over the first ten days of May. The weather was spectacular with everything in bloom and mostly blue skies with perfect temperatures.

The visits were book-ended by the Annual Trout Unlimited Spring Dinner on May 2nd at the beautiful Boathouse in Central Park where Scott volunteered his auctioneer magic raising thousands of dollars for TU projects while auctioning off some amazing national and international trips. The other bookend was what has become the Annual Hall and Hall/Open Fences/Holland and Holland Event at the venerable Holland and Holland Gun Room in midtown on May 9th.

Bill Collins, vice president and director of sales at the Yellowstone Club, chats with Open Fences publisher David Light.

We had nearly 100 RSVPs and, if everyone had shown up, we would have been in pretty tight quarters! Our featured guest was Sam Byrne of Cross Harbor Capital who led the group that bought the Yellowstone Club out of bankruptcy. He spoke eloquently and humbly about his love of southwestern Montana, the strong bonds that YC has formed with organizations like Hall and Hall and our next speaker – the Yellowstone Park Foundation – and the extraordinary reception they have received under their new management with sales exceeding $300 Million already in 2013. At this pace they hope to reach capacity in 6 to 7 years.

The Annual Hall and Hall/Open Fences/Holland and Holland Event at the venerable Holland and Holland Gun Room.

Karen Kress, the executive director of the Yellowstone Park Foundation, talked about the philanthropic work they are doing in the Park which lies literally 20 miles south of the Yellowstone Club and the opportunities for major donors to have a  behind the scenes look at what is going on in the Park. The surprise of the evening was a well received presentation by the Holland and Holland crew on the evolution of the gun featuring some beautiful antique shotguns some over 150 years old.

Karen Kress, the executive director of the Yellowstone Park Foundation.

The Hall and Hall team spoke briefly about the ranch real estate market and made themselves available privately to chat with interested invitees. The drawing for the door prizes which included a guided fishing weekend, an autographed set of celebrated photographer Tom Murphy’s work The Seasons of Yellowstone, and a weekend for two at the Yellowstone Club was another of the evening’s highlights. Since you had to be present to win, there were a number of disappointed people who left early or did not attend.  All in all it was a lovely evening which was enjoyed by all who were in attendance. Again, thank you to Holland and Holland and Open Fences.

Jim Taylor, Tim Murphy and John Pierce at Holland and Holland Gun Room.