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This Montana investment firm is betting big on ranch land in the West

December 10, 2021, 3:49 PM UTC

In recent years, private equity has gotten its hands into everything, from restaurants to retailers to nursing homes. And now it’s adding ranching to the list.

Beartooth Group, a private equity firm based in Bozeman, Mont., is acquiring distressed ranch land in the West and working with conservation groups to “rewild” property to its natural state. The group currently has $100 million in assets under management, and is overseeing the rehabilitation of three large properties in Colorado, Wyoming, and Montana.

Near Three Forks, Mont., the company cleaned up an 800-acre feedlot cattle ranch that contained a dump the size of “several Olympic swimming pools” and a septic pipe emptying into a creek, according to Beartooth founder Robert Keith. The firm worked with conservation groups to return the land to its original wetlands habitat, recovering a natural spring and planting native grasses, willows, and cottonwoods to help bring back wildlife like local pheasants, partridge, turkeys, deer, and antelope. 

Keith originally worked as an investment banking analyst at Morgan Stanley, then as a venture capitalist at Trident Capital. But he left that behind to start Beartooth 17 years ago.  

The firm has rehabilitated 13 properties since its inception, with two new properties in the works.  

Beartooth purchased a 930-acre property just west of Jackson Hole, Wyo., in 2014 from Marquita Maytag, one of the heirs to the Maytag fortune, and worked with the state of Idaho to clean up an abandoned coal mine and revamp an unhealthy forest, transforming it into a timber operation that is now open to the public and owned by the U.S. Forest Service. On another project, a 5,037-acre ranch west of Denver, the company spent eight years cleaning up degraded creek beds and overgrazed land filled with garbage, abandoned gold mines, and hazardous metal and gold mining residue.

For its property outside Denver, Beartooth added two conservation easements, which are voluntary legal agreements that permanently limit land use and development and offer tax benefits. The state ultimately bought the land for public access and wildlife management. 

“It’s the best kind of managed buyout,” said Keith. “It’s also moving the needle on climate change and habitat preservation.”

The pandemic prompted thousands of Americans to flock to rural areas in search of open spaces and nature, and last year marked near-record sales for rural land and ranches in many areas across the country. In October 2020, Farmers National Co., the nation’s largest farm management and brokerage firm, reported land sales worth $300 million, nearing the previous high of $320 million in 2018. Just this month, billionaire Rupert Murdoch bought a 340,000-acre Montana ranch from the Koch family for $200 million—the largest ranch deal in the state.

The nation’s wealthiest people grew far richer during the pandemic—wealth among U.S. billionaires grew by 60%, or $1.8 trillion. And many of the wealthy are now looking at ranch land, which tends to hold its value over time, said Jim Taylor, a partner with Hall and Hall, one of the largest rural real estate agencies in the nation. “People are recognizing that if you’ve got a ranch, it’s a pretty nice place to be,” he said. “And a ranch is the safest place to put your money.” 

That means land deals for Beartooth have been harder to find. Ranch inventory is low, and prices are high, said Taylor. “People aren’t selling, and they’re even taking their property off the market.”

The rewilding of ranch and farmland isn’t without controversy. The nonprofit American Prairie is also buying farmland that abuts public land and restoring it to its natural state in hopes of creating, at 3.5 million acres, the largest land preserve in the nation, without fences and open to the public. Farmers in eastern Montana are challenging the efforts, claiming the organization is “decimating” American farmland

While Beartooth awaits the next deal—and continues to rehabilitate the properties it does own—its investors get a side perk of using Beartooth’s land as a personal playground for such pastimes as fly-fishing, cross-country skiing, hiking, and more. That’s good news for Beartooth investor Mike Arenson, an avid fly fisherman. 

“It’s a great bonus,” he said. 

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