• Jaan Sepping

How Does LandEx Manage Risk?

LandEx is the first land investment marketplace that allows easy-to-access, diversified and transparent land investments. LandEx will unlock the true value of land by democratizing access to land investments.

One of the core ideas behind LandEx is transparency. We want the investor to know what we know and the information to be given to the investor in a fast, reliable and easy-to-understand way.

Land needs management and “boots on the ground” - we take care of it for the investor by partnering with local best-of-class land management firms. These players would not work with any one small land plot but thanks to our scale, they will work with LandEx. There’s also economies of scale in land management that we would have thanks to having many lands in a given country bringing the cost per hectare lower.



Assessing potential listings

We will only operate in countries where we have understanding of land investing risks through partnering with local land management firms and trustworthy data to build predictive analytics. All lands go through a thorough vetting process where we eliminate dubious, risky and negative/low estimated return lands. We will also be able to use our unique carbon know-how to plan and monetise carbon projects, which will allow us to purchase overlooked land assets. The same is true for an even newer and overlooked biodiversity-focused land investing. We will have a supervisory body dedicated to assess potential listings to analyse and pick the best ones for primary listing. In the end, we will also rely on the market (investors) to tell us which lands they want to purchase.

Investor transparency scheme

Red Flags

We do not list any lands that have even one red flag:

  • If there is a risk that the seller cannot sell us the land (does not have title, needs local municipality approval, local municipality first purchase right, lenders approval, etc.)

  • If the legal ecosystem and land title ownership is insecure and not transparent

  • If there any unknown liabilities on the offering

  • If the seller cannot be trusted (credit checks, AML/KYC)


LandEx Rating

We have developed a risk scoring methodology “LandEx Rating” which is asking 21 risk rating questions all of which have a yes/no answer that cover the main risks related with land investments. All scores above 4 (net 4 negative answers) will be deemed as risk group B. All scores above 8 are risk group C and above 12 risk group D.



Climate/Weather

1. Is there a non-resolved drainage issue?

2. Does the farm lack access to water for necessary irrigation purposes?(farmland)

3. Is there pest attacking threat? (forestland)

4. Is the crop species unsuitable for current/future climate? (permanent farmland / forestland)

5. Is there a risk of fire? (forestland)


Regulatory

6. Is there risk for the government to change the land use (e.g. turn the land into a natural protection area)?

7. Is there no direct access to maintained roadway?

8. Is the nearest crop delivery point > 100 km away? (forestland)

9. Is land use change allowed? (positive)

10.Development potential: location close to current or future metropolitan centres or location close to nature scenery for holiday homes? (positive)

Sustainability

11. Carbon project development potential? (positive)

12. Does this forestland have potential to be FSC certified? (forestland, positive)

13. Is there potential to turn this area into a natural protection area? (biodiversity, positive)


Financial plan

14. Is more than 10% of the total offering value being contributed to asset improvement?

15. Are there non-farming/forestry assets valued as part of the transaction (energy, hunting, other)?

16. Were there fewer than 10 land sales in a 100km radius within the last year?

17. Was there a market value drop of more than 10% in the region over the last 10 years?

18. Is there lack of data on historic productivity?

19. Does the land have stable cash flow potential (tenant or tenant interest)?

20. Is the financial condition of the renter stable? (farmland)

21.Have there been any commercial cutting in a 5km radius over the last 5 years? (forestland)



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