Farmland LP, the sustainable agriculture-focused fund manager, has held the first close of its real estate investment trust. The REIT is targeting $250 million and started fundraising in August.
The first close was shortly followed by the REIT’s first investment, a farm in Oregon.
Davis Farm in Corvallis is a 475-acre property which is adjacent to Farmland LP’s existing A2R Farm which it bought with its first investment vehicle, a private fund which is currently valued at $60 million.
Ten ultra-high net worth individuals made up the first close including both new and existing investors. Farmland LP is targeting more institutional investors than the first fund and is currently in due diligence with at least one institutional; investors from the US.
The REIT is also getting interest from Europe and elsewhere globally, according to according to Craig Wichner, managing partner at Farmland LP.
Farmland LP decided to launch its second offering in a REIT structure in order to offer investors an easier way of accessing farmland assets with tax advantages, Wichner.
The REIT will have a 10-year term with two, two-year extensions but Farmland LP is planning to list the REIT before the end of the term after acquiring land across five geographies with the US and increasing its cash flows.
The REIT aims to buy conventional farmland and convert it to organic, sustainable farmland making higher returns. REITs distribute 90 percent of cash flows to investors.
Farmland LP operates a buy-and-lease investment model but works closely with each farmer and also participates in shared revenue agreements of varying degrees.
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