Hancock Agricultural Investment Group has renegotiated down leases for nearly a third of the properties owned by the $245.3 million US farmland investment fund it manages for the Alaska Retirement Management Board.
Weakness in the US agri sector has hurt returns but is also opening up investment opportunities, representatives from the fund told members of the management board at its April meeting.
The Northern Agriculture Portfolio fund has lowered leases for seven of its 23 properties in the past year, by an average of $47 per acre. However the lower prices have created favourable conditions for capital deployment, Hancock Agricultural Investment Group president Oliver Williams told the board.
The fund is heavily allocated toward row crops, which have been particularly hard hit by a strong dollar and increased global competition. Row crop properties account for 93 percent of the Northern Agriculture Portfolio’s deployed capital, with the other seven percent invested in permanent crops. Future investments will bring the portfolio closer to the 80/20 ratio mandated in the investment guidelines, Hancock representatives told the board.
The fund is currently diversified across nine crops in 11 states in the US South, West, and Great Lakes regions. The fund has delivered an 8.62 percent combined return since it was established in 2005, with 4.21 percent from income and 4.28 percent from appreciation. The total one-year return is 3.93 percent, with 3.47 percent coming from income.
Hancock Agriculture Investment Group manages $2.2 billion of agricultural real estate, via individually managed accounts for institutional investors. The asset manager has 230,000 acres of farmland under management in the US, Canada and Australia, according to the firm’s website.