Peoples Company new recruits Curtis Buono and Jeremy Darner are working with investors to find opportunities created by California’s Sustainable Groundwater Management Act, the pair told Agri Investor.
“There are so many different market participants looking at things in different ways,” said Buono. “Be it to pull capital out to do something else, to expand, to buy another company, to replant or diversify their water portfolio. There are a lot of companies that are going to get creative.”
The former Cushman & Wakefield executives joined the Clive, Iowa-headquartered farmland brokerage, management and investment firm as managing partners last month to spearhead its expansion into California.
Buono said that farmland market participants had anticipated implementation of the SGMA since its passage in 2014. However, he added that the 31 January 2020 deadline for municipalities in over-drafted water basins to submit long-term sustainability plans had made the regulations feel “more real.”
He said that many actors in the market are continuing to reassess the water risks of properties purchased before the SGMA passed into law and are exploring new ways to capitalize properties in order to address long-term water needs.
Darner said he expects much of his work to focus on helping institutional investors address the bottleneck they say they face in deploying funds in California. To do so, he said, he and Buono will draw on knowledge of SGMA planning within specific water districts (which they declined to discuss in detail) and market activity within specific American viticultural areas.
“It’s going to be taking a more targeted approach to specific markets, specific water profiles, specific commodity-types,” said Buono, who served as national practice leader and executive chair of Cushman & Wakefield’s agribusiness practice and was with the commercial real estate firm for 11 years. “There are so many micro markets here.
“We anticipate doing some of the targeted acquisitions with some of the institutions where we can really put our expertise to work and help them find good-quality assets. Right now, what’s available in the market is your normal, frictional availabilities.”
Although the SGMA’s impact on farmland markets has been the focus for most investors, Buono said there has also been “overwhelming optimism” among agricultural producers that future groundwater loss can be mitigated. He said tenant producers have looked to institute on-farm waste initiatives and other conservation efforts, often working in partnership with owners to access any government support that might be available at the state or local level.
“We have a long way to go until 2040 when these groundwater basins have to have a sustainable level,” Buono said in reference to the timeline on which SGMA compliance plans have been formulated. “People are just going to have to continue to be mindful of everything they can do to conserve and secure reliable water.”
Peoples Company’s move into California follows other expansions into Washington and Michigan. Buono and Darner, who was a director of valuation and advisory at Cushman & Wakefield for four years, will work on brokerage and appraisals while operating from offices in San Diego and Fresno.