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Gold Leaf seeks to add water value to California almond property

Partner Jack McCarthy says the company’s deal-by-deal fundraising approach allows it to hold assets for periods longer than a typical farmland fund’s life.

Gold Leaf Farming was attracted to a 1,850 acre almond property in California because of its potential to successfully draw on multiple water sources, said partner Jack McCarthy.

“I’d say the in-place water is not incredible. We think there is a lot of opportunity to supplement that with different sustainable water sources,” said McCarthy, adding the firm is currently investigating whether solar-powered desalination technology might allow Gold Leaf to utilize on-site water that is currently too salty for farming.

“We’re looking at water recharge projects on this farm, because there is a creek that flows through it, so it has unique ability to potentially serve as a re-charge source.”

Modesto, California-headquartered Gold Leaf acquired the San Joaquin Valley asset earlier this month, making it the firm’s eighth acquisition since it was founded in 2018.

Financial details were undisclosed. The property was acquired from an unidentified multi-generational family partnership, which was advised by California farmland brokerage, consulting and advisory the Mendrin Group.

Gold Leaf’s primary focus among crops has been on California almonds and pistachios, McCarthy explained, but the firm has also acquired date orchards.

“We look for crops that are really difficult to grow in many places, so there is some constraint on supply, and that have really good demand tailwinds,” he said.

Gold Leaf has invested capital raised from more than 100 family offices and high-net-worth investors, who have contributed an average of between $100,000 and $200,000 each, said McCarthy. Many of those LPs have invested in more than one Gold Leaf acquisition, each of which is established as a separate business in a structure mimicking many family-owned farming operations, where siblings are attached to distinct properties, along with a single shared patriarch.

“If we can’t raise money, we just won’t do the deal. It keeps us honest. If our investors don’t want to do something, maybe we should give it a second look, too,” said McCarthy. “We’re not flippers because we are not operating in a fund vehicle, we don’t have to sell after seven or 10 or 12 years. Most of these farms, we’re going to own for a long time. Both of us [McCarthy and co-founder Brandon Rebiero] are in our 30s, so we have a long view in front of us.”

The former TPG Capital associate added that by maintaining a focus on medium-sized deals, Gold Leaf hopes to carve out a position where it does not have to compete with neighboring farmers interested in smaller adjoining plots, or established farmland funds generally focused on large-scale deals.

In addition, he said, Gold Leaf’s deal-by-deal fundraising approach streamlines efforts to respond to consumer trends by making agronomic and technological changes on the farms that the company believes will drive profits.

“With the different investment models that been used as more capital has flowed into the space, you see too many different people that need to make money and it creates difficulties in getting things done. When there’s an LP and a GP, then there is another GP [along with] a farmer that is leasing it; that many layers between the capital and farm can create difficulty,” McCarthy said.  “[Gold Leaf] is, in our opinion, the 21st Century version of what’s been happening in ag,” he said.