PGIM brings $1.2bn into open-end US agriculture fund

MassPRIM and the Washington State Investment Board are among LPs in a PGIM US Agriculture Fund vehicle that began its transition to an open-ended structure in 2018.

PGIM Real Estate has raised at least $1.2 billion in its open-end US agriculture fund.

According to an October regulatory filing, PGIM US Agriculture Fund has raised $1.158 billion from 13 LPs since the vehicle was launched in October 2018. PGIM declined to comment.

Materials presented in early 2022 to the Teachers Retirement System of Louisiana, which committed $50 million to the vehicle, explain the PGIM US Agriculture Fund began as a $400 million separate account with an unnamed US pension plan. The pension then contributed an additional $300 million as portions of the separate account farmland portfolio were transitioned into the open-end fund in 2018.

The materials presented to TRSL said PGIM was seeking $600 million as the assets were transitioned into the open-end vehicle.

The fund’s strategy targets net returns of 7-9 percent through direct operation of up to 25 permanent planting and row crop properties. It offers quarterly distributions and tiered annual management fees of 120 basis points on the first $100 million; 110bps on the second $100 million; 100bps on the third $100 million; and 90bps on any additional capita, according to meeting materials.

LPs in the PGIM US Agriculture Fund also include the Washington State Investment Board and the Employees’ Retirement System of State of Hawaii. Target crops for the fund, according to materials presented to WSIB, include avocadoes, hazelnuts, table grapes, pecans, cherries and nectarines.

MassPRIM materials presented at the time of the pension’s $500 million commitment to PGIM in early 2020 describe the firm’s focus on permanent crops across a portfolio of about 130,000 acres devoted to permanent crops, including almonds, pistachios, oranges, lemons and others.

In February, PGIM acquired a 3,597-acre farmland property in California from NASDAQ-listed citrus provider Limoneira Company for $100 million. The deal included a five-year agreement for Limoneira to provide packing, marketing and selling services for lemons harvested from the property.

In a sector overview published in May, PGIM described a global market marked by “tensions and opportunities related to ESG.” The report drew on expertise across PGIM’s wider network of asset managers active in fixed income, equity, real estate and private alternatives, and included explorations of slowing demand for alternative proteins and growing attention to food safety in developing markets.

The report also highlighted conventional meat and US cold storage real estate as compelling opportunities.

In late September, PGIM reportedly helped finance the acquisition of a 2,411-acre California farmland property by Peri & Sons Farms, a onion farming operation headquartered in Yerington, Nevada.