TIAA affiliate Westchester Group Investment Management has hired former Cargill executive Greta Lupu to serve as country manager for Romania, according to its quarterly newsletter.
Lupu joined Westchester in October, according to the most recent edition of the newsletter, which was posted April 10. Westchester declined to comment.
Lupu joins Westchester after about two years as Cargill’s chief financial officer for Romania and Bulgaria, a role she assumed after one year as the company’s finance head for Romania, according to her LinkedIn profile. Prior to joining Cargill in July 2015, Lupu held accounting positions in Romania for Bayer, IBM, Pricewaterhouse Coopers and others before joining Spearhead International in 2009.
At Spearhead – a vertically integrated agricultural producer with assets in Poland, Romania and elsewhere that Paine Schwartz Partners acquired through its $893 million Fund IV in 2015 – Lupu spent two years as chief financial officer of its Romania unit before becoming a managing director in the same team, a position she held for more than two-and-a-half years before joining Cargill.
Romania is among the countries Westchester has identified as a focus of its TIAA European Farmland Fund, a vehicle that had secured a $65 million commitment from $40 billion Swedish pension AP2 by late 2016 and for which market sources tell Agri Investor the firm is targeting $250 million. The country ranked as the fastest-growing farmland market in Savills’ recent Global Farmland Index report, which showed Romanian land values to have increased by 24 times between 2002 and 2016.
“The pioneering days in Romania, to a large degree, are over,” Insight Investments head of real assets Detlef Schoen told Agri Investor.
During the 1990s, Schoen said, an early wave of mostly European investors paid very low prices to aggregate family-owned farmland assets that later came under the control of professional managers including Rabobank, Spearhead, Dangro and others. More recently, he noted, such investors have been supplanted by local buyers capable of purchases of as much as €30 million.
“To the degree that we are losing leases these days, we are losing more leases to local operators than to foreign investors,” he said. “It’s becoming more and more difficult to make attractive risk-adjusted returns in mainstream, plain-vanilla farming in Romania. It’s still doable, but the emerging-market characteristics have largely disappeared.”
A second source familiar with the market told Agri Investor that Romania’s climate, soil types and the ability of foreign investors to utilize corporate structures that allow them to own land all help explain Westchester’s interest in the market.
Because Romania is still “relatively underdeveloped”, the source said, there are operational challenges, but the country’s European Union membership provides a rule of law framework that helps the market compare favorably to countries further east, such as Ukraine, Moldova and Russia.
“Romania is probably the most interesting market from an institutional agricultural investment perspective, relating to Central and Eastern Europe,” the source said, estimating that the market is roughly equivalent to Poland’s of 20 years ago. “On balance, the rewards – and the potential rewards – outweigh the risks.”
“The pioneering days in Romania, to a large degree, are over”
Like farmland markets virtually everywhere, the source said, local farmers are the most active participants in Romania’s farmland market, followed by European family offices and high-net-worth individuals. The source estimated as little as one percent of land transactions in Romania currently involve institutions.
“You can get size and scale, which you cannot, very easily, if you looked at Czech Republic or many other countries in the immediate region,” the source said. “Couple that with an inexpensive or an undervalued land market, we think that makes a pretty compelling argument for large-scale institutional investment.”
Westchester has signaled its interest in the Romanian market for more than two years and has yet to have a significant impact on pricing, according to the source.
“Relative to the overall size and scale of the market, they are a dot on the landscape, even though they are very significant,” the source said. “They might move the market on a very localized level; mainly if they go in and the local market understands that that’s TIAA-CREF, clearly that might change expectations.”