Nuveen has acquired more than 5,000 acres of California farmland for $67 million as it continues to collect properties in a state that has been a focus of its open-end farmland fund.
A Nuveen representative confirmed to Agri Investor the accuracy of a late September Sacramento Business Journal article that cited locally accessible records of a sale by Robert and Sharon Hilarides of Tulare, California. The journal reported Nuveen had purchased from the Hilarides 5,500 farmland acres spread across 30 adjoining parcels in southern Sacramento County.
Nuveen declined to comment and the Hilarides did not return messages seeking further detail.
According to its most recent regulatory filing in January, the Nuveen Global Farmland Fund (NGFF) had raised $800 million from 21 LPs towards an initial target of $2.4 billion identified in a late 2019 presentation to the Vermont State Retirement System, which committed $100 million to the open-end vehicle.
Other investors in the fund include the National Bank Investments’ Real Assets Master Pooled Fund; Denver, Colorado-headquartered Versus Capital – which manages a real assets fund in which a commitment to the NGGF constitutes 2.4 percent of total assets – and Sumitomo Life Insurance Company of Japan, which announced a $45 million commitment to the vehicle in June.
According to materials presented to VRS, the NGGF will target net internal rates of return between 7 percent and 9 percent, with an income yield of between 3 percent and 4 percent. They showed Nuveen had committed $275 million to the vehicle in support of a strategy calling for farmland investments averaging about $20 million across the US, Australia, New Zealand, Poland, Romania and Chile.
Nineteen of the 24 properties currently held within the NGGF, according to a Nuveen website dedicated to the fund, are located in California. The NGGF’s California farmland includes both established and development properties focused on crops including walnuts, almonds, wine grapes and avocados. California vineyards and tree nut properties were among the collateral provided by the NGGF to support a $250 million financing extended by MetLife on a 15-year term in 2020.
In a late 2021 research paper, Nuveen farmland portfolio manager Joseph Villani and portfolio analyst Ben Martin reviewed how economic tumult related to covid-19, supply chain disruptions and inflation concerns had drawn investors’ attention to farmland as a safe haven asset. The pair noted that low bond yields and interest rates had already inspired investors to seek yield before the pandemic in a way that has supported demand for farmland.
“Despite income returns from farmland declining in recent years, as investor interest has resulted in capital appreciation that in certain cases has outpaced the asset’s earning potential, the income yield remains attractive relative to fixed income assets,” they wrote.
Nuveen’s $9.2 billion portfolio contains at least 431 farmland properties growing more than 40 different crop types in at least seven countries. Last year, the firm combined its farmland asset manager, Westchester Group Asset Management, with its in-house timber manager, Greenwood Resources, to create a new unit called Nuveen Natural Capital that manages 3 million acres across timber and farmland.