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Hancock brings in $706m for blended timber and ag vehicle

An industry observer tells Agri Investor that the open-ended vehicle, which has received pledges from at least 37 investors, represents 'a bit of a new path' for the industry.

The Hancock Natural Resources Group has raised more than $700 million for a vehicle devoted to both timberland and farmland, according to a regulatory filing.

The filing revealed that the Hancock Timberland & Farmland Fund made its first sale late last month and has gone on to secure $706.15 million in commitments from 37 investors. The document also shows that Hancock Timberland & Farmland Fund is accepting minimum investments of $3 million and targeting investors in eight states. A late December filing for the same vehicle showed that Hancock had paid $20,000 in sales compensation to John Hancock Distributors and legally established the fund in 2016.

A Hancock representative declined to comment.

In October, Hancock secured a $40 million commitment from two units of Korean conglomerate the Dongbu Group for an open-ended timberland and farmland fund, according to a report in the local media. The report said the fund allowed for early redemption after three years following inception.

“The seven-year fund of Hancock will acquire lands available for timber and farm production, and develop or transform them into timberlands and farmland producing pistachio nuts, almonds and other crops,” according to the Korea Economic Daily.

Return expectations are thought to range between 9 percent and 11 percent, with a guarantee of at least 4 percent returns. At the time, a Hancock representative told Agri Investor that the firm does not guarantee returns under any circumstances and declined to comment further.

Industry interest

An industry observer familiar with the fund applauded Hancock’s decision to use an open-ended structure, telling Agri Investor that it represented “a bit of a new path.” Hancock’s structure is slightly different from evergreen vehicles that are now common in the market, according to the source, who said its progress is being watched closely by many, including by managers currently studying proposals to create an investment vehicle of a similar nature.

“Nobody has quite figured out how to do the accounting at the property level when another dollar comes in and you haven’t bought a property, or a dollar goes out and you haven’t closed it,” the source said. “We’re in a really clumsy stage of the finalization of ag still. Nobody’s quite figured out how to do these [open-ended funds], nobody’s figured out how to do a real retail product, and so on. All of these developments are good.”

Late last month, Hancock Agricultural Investment Group’s former director of acquisitions Brett MacNeill returned to Scythe & Spade, an Idaho-headquartered ag investment firm, after leaving Hancock in June.

According to Hancock’s website, the Agricultural Investment Group’s current director of acquisitions is David Baughman, who assumed the role in July after serving as senior vice-president at Hancock Farmland Services.