Utah pension directly acquires Louisiana farmland for $37m

Utah Retirement Systems-backed Nebo Farms acquired a 7,365-acre farmland property in Catahoula Parish, Louisiana from Farmland Partners for $37 million in November.

Paul Pittman, chief executive of New York Stock Exchange-listed FPI, told Agri Investor that the real estate investment trust has already redeployed capital earned in the sale into a similarly sized property about 30 miles away.

“We got to book a profit of substantial scale,” said Pittman, estimating the purchase price in the sale represented a 15 percent gain on what FPI paid for the property. “We don’t put things out on the market for sale, but as a REIT, everything we have is for sale if someone comes along and pays a good price.”

According to a soil map posted on the Farmland Partners website, the Catahoula Parish farm has produced cotton, soybeans, rice, wheat and other crops. The 2016 map shows 82 percent of the soils on the property were classified as Sharkey clay on rarely flooded 0 percent to 1 percent slopes.

URS declined to comment. “We generally do not comment on our investments,” communications manager Brian Holland told Agri Investor in response to an email inquiry regarding the acquisition of Nebo Farms.

Earlier this month, farmland investment advisory AgVest Advisors announced it had sourced, vetted and managed the closing of the deal in Catahoula Parish on behalf of an unidentified “premier institutional investor.”

Bethalto, Illinois-headquartered AgVest’s president Chris Brawner told Agri Investor his firm relied on local networks in the US Delta to source the property for a client he declined to identify.

He explained that while an influx of new buyers including farmers re-investing post-covid government support payments have driven Midwest farmland prices up as much as 30 percent over the last 18 months, institutional investors remain the most active buyers in the US Delta states of Alabama, Arkansas, Louisiana and Mississippi, where price swings are less common.

“A lot of wealthy individuals are understanding that farmland is consistent, especially in volatile times, so they are taking money out of other fixed income asset classes and 1031-ing the money into farmland,” said Illinois-based Brawner.  “We’ve seen a lot of new individual-type investors, especially in the Midwest, and the price is less of a factor for them than it is for an institutional pension fund that has to reach a certain return on the farmland.”

AgVest was established in 2018 to work with institutions, family offices and individuals in devising and executing direct farmland investments. Whereas investors may pay fees for capital managed during a deal-sourcing process whose duration is hard to predict, Brawner explained, direct investments allow LPs to pay based on performance.

“We’re not getting that upfront – whatever the funds charge, 0.75 percent of committed capital on day one – that you will see a lot of time. These funds are collecting money upfront and then going to spend it,” he said. “[Under those other fund structures] you are not looking for the best deals, you’re just trying to place capital.”