Exclusive: Dubai SWF plans US farmland splurge as second deal nears

A JV between the emirate’s Investment Corporation and Miami-based Optimum Agriculture is closing in on a $150m land acquisition after buying a 38,000-acre ranch in Florida.

A Middle-Eastern sovereign wealth fund and a US fund manager with Latin American roots have joined forces to deploy vast amounts of equity across the US and the Americas.

The Investment Corporation of Dubai, which manages about $230 billion, and Optimum Agriculture, a Miami-headquartered holding company, respectively own 90 percent and 10 percent of the newly created joint venture, dubbed Optimum ICD Holdings, Optimum co-founder and chief executive Gaston Marquevich told Agri Investor.

Although the pair do not have a set target for how much they are aiming to deploy in the long run, Marquevich said, they are clearly hoping for an ambitious ramp-up of the portfolio.

Yesterday, the two partners announced their acquisition of a 38,453-acre asset in Florida, which Marquevich described as the state’s largest ranch, for $136.5 million. The JV is now working on another US deal valued at between $150 million and $200 million, which it is hoping to close within three or four months, he said. It is also starting to look at an asset located in Latin America.

Marquevich, who declined to disclose return targets for these acquisitions, said the pair are planning to hold on to the assets for the long run. “There is no exit term. It’s all about land transformation. We’re buying an asset, adding value and trying to improve the income of the land.”

Curious cooperation

The partnership began three years ago, when Optimum Agriculture pitched a proposal to a London-based group, as part of a process to select “a US ag operator to partner with a sovereign fund,” says Marquevich. “We did not know which one of the sovereign funds. So, we filled the forms, answered questions and finally we got selected.” Only at that point, he adds, did they find out their partner was going to be ICD.

This type of tie-up is a first for Optimum, a 10-year-old company started by Marquevich and his two London-based partners, Andrea Michelli and Javier Uribarren, in a bid to roll-out the Latin American farming models they knew well in the US.

The group now manages $320 million, with operations in Arkansas, Louisiana, Mississippi and Florida, as well as in Argentina and Uruguay. Structured as a holding, it does not run a fund, Marquevich said, but invests from its balance sheet on behalf of “a select group of institutions, individuals and family offices.”

The firm’s first deal with ICD, its third transaction this year, was a complex one. El Maximo Ranch, as the asset is named, is changing hands after on/off negotiations that lasted two years, according to Lorenzo Moll Parron, a Miami-based partner at the KYMP law firm interviewed by law.com this week. The deal entered its last stretch when the partners secured $75 million in financing from MetLife Real Estate Lending.

Total divestiture

The assets were the last agriculture holdings of Latt Maxcy Corporation, a family business founded in the early 20th century that once ran a ranch stretching 150,000 acres.

“Various state agencies had previously purchased more than 40,000 acres, which later became the Kissimmee River State Park. In 2005, Latt Maxcy sold 41,000 acres in Osceola and Indian River counties to South Florida developer Anthony V Pugliese III for a failed real estate development called ‘Destiny,’” Optimum said.

Latt Maxcy’s principals still own Citizens Bank & Trust, which has 13 branches in Polk County, Florida, and a real estate development subsidiary.

The deal comes at a time when sovereign funds from the Gulf are scouting global markets for agricultural assets, as evidenced by Qatar Investment Authority’s stated ambitions to invest big bucks in Africa.