Washington board set to invest $100m to Homestead Fund II – updated

WSIB has recommended the fund invest in Homestead Capital's second US farmland fund, potentially bringing Fund II commitments to $150m in the month after its launch.

The $108.50 billion Washington State Investment Board has recommended a $100 million investment in Homestead Capital USA Farmland Fund II, according to the fund’s public records officer Tish Day.

The vote follows Maine Public Employees Retirement System’s $50 million commitment to the fund, which is targeting $350 million, earlier this month.

Homestead Capital closed its first fund on $173 million last year, falling short of its target by $52 million in April 2015, exactly one year after it was launched, according to SEC filings. However, if the WSIB recommendation is approved at a meeting in the middle of September, the fund will be almost half way to its target just one month after its launch.

Fund I also received support from a range of institutional investors, including Texas Teachers Retirement System, which allocated $15 million, and the University of Alabama. Other LPs include real assets and equity manager FLAG Capital Management, now owned by Aberdeen, and investment consulting and advisory firm Meketa Investment Group. Funds of funds, high-net-worth individuals and insurance companies also invested in the vehicle.

Homestead did not respond to inquiries regarding Fund II’s strategy, citing SEC regulations.

Fund I targeted farm investments in the Mountain West, Pacific, Midwest and Delta regions. Daniel Little, managing partner and head of portfolio construction at Homestead Capital, told Agri Investor last year that these would be “the most attractive agricultural regions within the next 10 to 15 years, and are where our expertise can be best applied”.

Its strategy has been to create a diversified portfolio of assets across different regions, crops, lease types, farm operators and other risk factors. Little said around 70 percent of the fund would be invested into row crops and the remaining 30 percent in permanent crops.

Homestead used up to six different lease types in its buy-and-lease strategy for Fund I: cash rent, flex lease, net share, fixed bushel, crop share and custom arrangements with tenant farmers.

WSIB has several investments in agriculture, including the Agriculture Capital Management’s ACM Permanent Crops Fund; Olympic Sun, a UBS AgriVest-managed separate account for permanent and vegetable crop investment in the US; Teays River Investments, a row and permanent crop farmland management company; and the Australasian Laguna Bay Agricultural Fund.

WSIB holds agricultural investments under its $ 2.19 billion tangible assets portfolio, of which 17.7 percent is dedicated to agriculture, according to the fund’s March quarterly report.