Capitaline nets $22m in open-ended farmland fund

The South Dakota-based private equity firm is targeting Midwest rowcrop farmland investments on behalf of high-net-worth individuals and family offices.

US Farmland Fund, an open-ended investment vehicle managed by South Dakota-based private equity firm Capitaline Advisors, has raised $22 million from 87 investors since launching in June 2010, according to a regulatory filing made Tuesday.

Capitaline farmland manager David Bierman told Agri Investor that the fund would continue to solicit minimum investments of $250,000 from high-net-worth individuals and family offices to invest in tillable rowcrop farmland located in the US Midwest.

According to the firm’s website, the fund had invested in 7,500 acres of farmland that have been rented to 14 local farmers as of the end of 2016.

The fund generates returns through cash-rents and appreciation of land values, according to Bierman, though he declined to specify a return target.

“We feel right now that it’s a time to buy,” he said, describing the current state of US farmland markets. “Everything was overvalued and now it has come back down to earth. Now it’s time to get some money out there and get a good position.”

Bierman said Capitaline’s smaller size relative to some of the market’s bigger investors can be an advantage in helping to establish relationships with local farmers in the Midwest.

“If you start buying everything you see, if you’re like one of those big funds like TIAA, they really can influence the market and inflate it greatly because they have money and they need to get it spent,” he said. “If we can stay lower, with our pieces [of land], we buy it more intelligently. In that sense, we’re not running up the land market, so we don’t see too much hostility.”

Founded in 2002 , Capitaline has managed more than $100 million across seven sponsored funds. Capitaline was originally focused on building ethanol plants and raised a total of approximately $70 million across three funds dedicated to the sector between 2004 and 2006.

The firm’s Capitaline Agribusiness Fund invested in both privately-held ethanol companies and publicly-trade agribusiness, generating an annualized return of 31 percent over its three-year life ending in mid 2014, according to the firm’s website.

In addition to US Farmland Fund, Capitaline also offers individually managed farmland portfolios for investors making a minimum investment of $5 million. Earlier this year, Capitaline also launched US Farmland Holdings, an open-ended investment vehicle designed for institutional and non-US investors.