Direct agricultural investments by the State Board of Administration (SBA) of Florida have outperformed the NCRIEF Farmland index over the past five years, according to a presentation given at the $184 billion pensions’ Investment Advisory Council meeting last Monday.
In a Real Estate Program Report presented at last Monday’s meeting, consultant The Townsend Group wrote that Florida SBA’s agricultural investments have produced 17.8 percent returns over the past five years, compared with 15.1 percent for the NCRIEF Farmland index.
According to a presentation from senior portfolio manager Lynne Gray, Florida SBA’s agricultural investments make up 6.8 percent of the broader Real Estate Principal Investments Portfolio.
The $579.8 million portfolio is currently made up of a total of 33,764 acres of farm properties, with 18,567 acres growing row row crops and 15,197 devoted to permanent plantings.
“When you look at the performance of the ag properties, we view them favorably,” Gray said during the presentation, noting that the pension began investing in the sector in the mid-1990s and is currently conducting due diligence on two additional agricultural properties.
Florida SBA communications manager John Kuczwanski explained to Agri Investor in an email that potential agricultural investments are identified by either Florida SBA staff or its consultants and then managed by one of the pensions’ two advisors, Prudential Agricultural Investments and Hancock Agricultural Investment Group.
When measured by market value, permanent crops predominate, at 83 percent of total value. Specifically, almonds and pistachios each account for a quarter of the permanent crop portfolio, with citrus accounting for 18 percent, walnuts constituting 8 percent of the portfolio, 6 percent devoted to grapes and one percent devoted to apples. Properties growing smaller amounts of additional crops including pears, cherries and avocados make up the balance.
Geographically, the portfolio’s 28 agricultural properties is heavily weighted to the US West Coast, with 21 properties and 82 percent of net asset value located in that region. The next most prevalent region is the US South, with six properties accounting for 16 percent of net asset value growing crops including cotton, wheat, corn, soybeans and citrus, among other crops.
Florida SBA owns just one property in the US Midwest, a corn and soybean farm in Bureau, IL that accounts for 1 percent of net asset value.
Cumulatively, the agricultural portfolio brought in $37 million in net operating income during the 12 months ending at the end of September, according to Gray’s presentation.