Fort Lauderdale seeks manager for $35m farmland allocation

Dahab Associates director of research Kevin Connolly says farmland allocations are becoming more common among his investment consultant peers, while he sees opportunities narrowing in the market.

The City of Fort Lauderdale General Employees’ Retirement System has issued a request for proposals for firms capable of managing a $35 million farmland allocation.

The $709.7 million Floridian pension’s RFP is being administered through a questionnaire managed by New York-headquartered investment consultant Dahab Associates. The 16-page questionnaire includes requests for information about firm personnel, performance and strategy along with ag-specific investment philosophy questions relating to soil type preferences and historical discrepancies between land appraisals and sales, among others. Submissions are due by May 12.

Dahab director of research Kevin Condy declined to comment on submissions received to date and told Agri Investor that based on feedback from managers and past experience, between 10 and 20 submissions are likely. He added that Dahab’s clients include pensions of all sizes and that Fort Lauderdale’s search comes at a time of growing interest in farmland.

“It didn’t seem like a lot of our peers in the consulting space were using this [farmland] as an allocation and now it seems like you see one or two searches every few weeks,” said Condy, who has been with Dahab since 2014.

Fort Lauderdale will accept submissions for both open and closed-end row and permanent crop focused farmland strategies, including those that include a protein component. Though protein is not a specific focus of the search, Condy explained, his firm aims to cast its net as wide as possible.

“There’s a lot of funds that are popping up,” added Condy. “We do not have a buy or a sell list. We do not try to exclude anything out of hand without all the information. We will accept them and go through all the RFPs just to make sure the Board of Fort Lauderdale will see the best of this universe.”

He declined to discuss details of Dahab’s manager vetting process beyond explaining its product comes in the form of advice to its pension board clients.

“There are some boards that don’t necessarily feel comfortable going into things they don’t completely understand. Farmland sort of threads the needle, typically. It’s not something that anyone has been invested in on a personal basis, but it makes sense. It’s somewhat easily explainable and we can do education quite quickly.

In 2018, Dahab administered a timber and ag-focused RFP for the Chattanooga Police and Fire Pension Fund that attracted submissions from managers including Fiera Comox, Chess Ag and Campbell Global and others before ultimately resulting in investments managed by UBS Farmland Investors and the Molpus Woodlands Group.

Condy highlighted increasing competition for deals from well-capitalized farmers as among the factors that have narrowed the opportunity in US farmland during the years since.

“There are some non-economically minded players in the space that are probably overpaying a little bit. Five or six years ago, or even three or four years ago, that wasn’t happening as much,” he said. “It was an easier sell from our standpoint when you had some of these properties yielding 4 or 5 percent easily with some kicker on the back end for economic value. Now, with 10-year [US Treasury] at 4 [percent] and a lot of these vehicles are locked up – you can’t get your money as quickly, it’s not liquid – understandably so. The opportunity set is not as good, it’s still good.”

Condy said Dahab’s summary of proposals received is likely to be delivered to the Fort Lauderdale Board by mid-summer with their subsequent decision on an investment finalized before the fourth quarter.