Bonnefield dismisses Saudi menace as Fund IV reaches C$80m third close

President Tom Eisenhauer says the firm’s sale/leaseback model has helped it build an impressive reputation among Canada’s farmers, making for a “remarkably busy summer.”

Canadian farmland investment manager Bonnefield Financial has reached a C$80 million ($61.4 million; €53 million) third close on its fourth farmland investment vehicle, according to the firm’s top executive.

Following a previous close on C$70 million in October, the new pledges bring committed capital to Bonnefield Canadian Farmland IV to C$211 million.

Chief executive Tom Eisenhauer told Agri Investor that the new commitments came from a mixture of new and existing institutional investors mostly based in Canada. He said the vehicle will target high single-digit to low double-digit returns through acquiring row-crop and permanent-crop farmland throughout the country.

Investors’ growing understanding of farmland markets has helped boost interest among Canadian investors, Eisenhauer said. He noted that, in the view of farmers, moves by Saudi Arabia to curtail its investments in Canada have had little impact on the latter’s agricultural sector, and said other macro factors may actually be supporting the market.

“We are seeing increased caution, and therefore farmland looks increasingly attractive to a lot of folks,” said Eisenhauer. “There continues to be an interest in farmland as an alternative to bonds, for which the outlook is not terribly bright in an increasing-interest-rate environment.”

Recently, Eisenhauer said, Bonnefield has continued to focus on building Canadian farmland portfolios that are varied by both region and crop. He declined to identify specific crops in which Bonnefield has recently invested.

“We’ve had a remarkably busy summer,” Eisenhauer said. “Some of our more recent deployments have been in Alberta – both irrigated and dryland areas. We are quite heavy in Ontario as well and in Eastern Canada, notably New Brunswick, where we’ve deployed some capital recently.”

Because most of Bonnefield’s transactions are structured as sale/leasebacks, Eisenhauer said, part of what has driven the busy dealmaking environment for the firm of late has been word of mouth, as the farmers it has partnered continue to help raise its profile among their peers.

“There are some pretty sophisticated farmers out there who are looking for alternatives to debt to finance their operations,” Eisenhauer said. “They are looking for a long-term financial partner who is not going to control their operations. Some of the other models require equity investment and you’re really handing over a significant part of the control of your operations to somebody else. Well, a really good farmer hates that!”