Secondaries give LACERA the opportunity to deploy at scale in farmland

Investment officer Pushpam Jain says the pension’s exposure to commodities alerted it to opportunities in farmland markets it had tracked since 2018, which ultimately led to more than $500m in TIAA secondaries deals.

The timing of the Los Angeles County Employees Retirement Association’s entry into farmland through three secondaries transactions since late 2021 has been determined by a combination of market developments and opportunity.

Pushpam Jain, an investment officer for LACERA’s real assets program, told Agri Investor the $68.8 billion pension had investigated other potential structures for farmland since at least 2018. The pension was able to make its first farmland investments through a pair of secondaries deals worth a combined $450 million in funds now managed by Nuveen in late 2021, when an existing LP – which he declined to identify – was looking to exit.

“At least in farmland, we’ve spoken with quite a few parties in the market. There have been almost no transactions in the secondaries space in farmland itself,” said Jain, who held positions with UBS Asset Management, Merrill Lynch, GE Capital and others before joining LACERA in early 2021, according to his LinkedIn profile. “If you were to include agribusiness – I don’t know how many have been executed – but there have been quite a few that have been shown around with people looking to transact. Farmland-wise, quite a few of the advisers we spoke with hadn’t seen anything for at least a decade.”

Jain declined to clarify whether the sellers were the same in the late 2021 deal and a subsequent $85 million secondaries purchase late last year, or to discuss details of either transaction. He did clarify that because both deals were above the $50 million threshold established for direct investment in co-investment and secondaries by LACERA staff, board approval was required for time-sensitive transactions to buy into the farmland funds.

“Secondaries don’t really happen in this space as much, so we had to take advantage of the timing and [the fact] it was available to us,” he explained.

Jain added that one of the challenges LACERA previously faced was the relatively small number of farmland funds able to accommodate its typical minimum fund investment of $100 million. A major benefit of gaining exposure to TIAA farmland funds, he added, was the ability to investigate an established portfolio of farmland that includes developed row and permanent crop assets in the US, Australia and Brazil.

“We can give $100 million to Fund A, B or C. We don’t really know what they will do with it, in the end. We don’t know which exact farms they will buy. The major attractive feature of this secondaries is that everything is bought and developed,” he said.

Secondaries and co-investments currently comprise 8 percent of LACERA’s overall portfolio and are expected rise to 21 percent by 2030, in an effort that staff described in a November presentation as being motivated by a desire to mitigate costs and eliminate J-curves. Jain said co-investments have included at least one agribusiness deal alongside London-headquartered Cibus Capital, to which LACERA has made made three fund commitments.

Jain explained his team views such secondaries and co-investments as tools that can help provide exposure to attractive markets. In the case of LACERA’s interest in farmland, he added, recent signals from elsewhere in the portfolio also helped bring the real asset team’s attention to opportunities in the market.

“We have an allocation to commodities in general – that includes grain as well as the oil/energy complex and other segments. Through that, we had noticed there was quite a bit of inflation impact coming through these segments and realized that would probably be reflected in farmland at some point. That was one of our theses going in,” he said. “The question could be asked: would we have done it if it [the secondaries deals] were not available to us?”