PGIM strikes $100m deal for California citrus property

PGIM Agricultural Investments has acquired a 3,537-acre farmland property from Nasdaq-listed citrus growing business Limoneira Company in a $100 million deal.

The property consists of 3,537 acres in Tulare County, California, comprised of a total of 2,700 planted acres, 231 acres of unplanted ground and 606 acres of open space.

The PGIM Real Estate subsidiary has entered into a farm management agreement for Limoneira to provide farming services related to the property for an initial term of one year.

Limoneira and PGIM Agricultural Investments also entered into a grower packing and marketing agreement for Limoneira to provide packing, marketing and selling services for lemons harvested on the property for a minimum five-year period.

Limoneira’s sale of the property forms part of the company’s 12-18 months goals of reducing debt, transitioning to an asset light business model and selling non-strategic assets.

PGIM declined to comment. The firm manages an open-end vehicle called the PGIM US Agriculture Fund, which received a $100 million commitment from the Washington State Investment Board in April 2021. Materials related to that commitment described PGIM’s efforts to add new properties to an open-end vehicle managing $400 million in existing farmland properties, targeting $600 million.

“The fund is being raised by PGIM Agriculture, which is seeking to raise $600 million from a small number of investors to add to an existing $400 million investment portfolio,” said a WSIB Investment Advisory released at the time of the commitment. “Concurrent with the fund raise, the fund will be converting to a perpetual open-ended structure,” it added.

The vehicle was also backed by a $50 million commitment from Teachers’ Retirement System of Louisiana in February.

PGIM US Agriculture Fund now seeks an additional $200 million to support a $1 billion strategy targeting net returns of 7-9 percent over a complete market cycle through direct operation of 20-25 permanent planting and row crop properties.

According to TRSL meeting materials, the vehicle offers quarterly distributions and tiered management fees of 120 basis points annually on the first $100 million; 110 basis points on the second $100 million; 100 basis points on the third $100 million; and 90 basis points on any additional capital.