PSP joint venture buys 41,000-acre Hawaii property

A market source tells Agri Investor the creation of the diversified Mahi Pono joint venture reflects the C$159bn pension’s strategy to develop between 20 and 25 platforms across agricultural regions and sub-sectors.

In late December, a joint venture between Canada’s Public Sector Pension Investment Board and California-headquartered Pomona Farming announced its purchase of a 41,000-acre farmland property in Hawaii.

According to the seller, Honolulu-headquartered real estate company Alexander & Baldwin, the property was sold for $262 million in a sale that “will launch a new era of agriculture on Maui.”

The property was formerly owned by the Hawaiian Commercial and Sugar Company and operated for 150 years ending in 2016.

Named Mahi Pono, which means “to farm or cultivate morally or properly” in Hawaiian, the joint venture has pledged to focus on production of non-GMO crops for local consumption and export and to provide local farmers with training, equipment and land and water within an agricultural park.

As part of the deal, Mahi Pono has also purchased Kulolio Ranch and Central Maui Feedstocks from A&B and offered employment to the firm’s five ag-focused personnel and launched a joint venture to own and operate East Maui Irrigation Company.

“Mahi Pono’s farm plan currently envisions cultivating a broad range of food crops for local consumption and export, including coffee, various fruit and vegetable crops and an expansion of A&B’s grass-fed cattle project at Kulolio Ranch.”

Mahi Pono representatives referred questions to PSP Investments, which did not reply by the time of publication.

On its website, Pomona identifies itself as a “global investment and food branding company” that is committed to sustainable use of natural resources to benefit local communities.

In addition to the Mahi Pono property, its 93,000 acres of farmland under management include 27,000 dedicated to olives, raisins, almonds and forage crops at the southern end of California’s Central Valley; 11,000 acres dedicated to alfalfa, tomatoes, almonds and onions in Sacramento – San Joaquin River Delta Valley; 6,400 acres growing organic and conventional almonds in California’s Central Valley and a 7,600-acre almond property outside Oakdale, California.

Several market sources confirmed to Agri Investor media reports that Pomona’s principals are executives also associated with almond-focused real assets firm Trinitas Partners. According to his LinkedIn profile, for example, Trinitas principal Kirk Hoiberg has simultaneously served as a director at Pomona Farming since March 2017.

High maintenance

A market source told Agri Investor that, while they themselves had previously investigated some opportunities in Hawaii, the state’s collection of mostly small land holdings has kept it from being too central a focus of institutional investors.

PSP’s investment in Hawaii, according to the source, continues a pattern of large agricultural acquisitions during the past few years, adding that the reported price of $262 million was roughly in line with the $150 million to $250 million range of deals pursued in Brazil, Australia and elsewhere.

The source added that, although PSP has awarded two or three mandates for agriculture, most of its investments have been direct.

“Their idea is they want to go with 20 to 25 different platforms across different regions in sectors, with that initial check size that they can then build on top of,” the source explained. “The challenge in ag is that these platforms are very high maintenance and you can find yourself getting stretched in all kinds of different directions.”

According to its 2018 annual report, PSP’s $4.8 billion natural resources portfolio is focused on ag, timber and related opportunities and prioritizes direct, long-term investments that allow it to build scale with like-minded operational and financial partners.

PSP’s 2017 annual report discussed plans to “build scale in US agriculture” through a focus on California almonds and water rights, highlighting a then-recent purchase of 10,000 acres dedicated to almonds in California that it said constituted its first direct investment in permanent crops.