May 10, 2018

Toronto-based farmland investor Area One Farms has announced the launch of two new funds: Area One Farms Fund IV, and Area One Farms Fund V.  Both funds have been launched with the intention of offering investors the opportunity to access equity partnerships with Canadian farmers, and to advance Area One’s goal of forming meaningful partnerships that will help Canadian farmers grow their enterprises through land conversion efforts that have an eye toward sustainability.

Shared Value Approach

Launched in 2011 by siblings Joelle and Benji Faulkner, Area One Farms creates joint venture partnerships with farming operations looking to expand, but that do not want to take on large amounts of bank debt.

Focusing on operations that are looking to scale up significantly and rapidly, Area One has traditionally targeted farmers that are looking to double or triple their scale, and for whom private equity is more stable than bank debt.

Under this “shared value approach”,  a farmer looking to expand might commit 20 percent of the cost of a land acquisition, while Area One Farms would fund the balance of the cost. The firm would then create a joint venture with the farmer, taking an equity stake in the newly acquired land with the intent that the farmers would buy out Area One after an agreed-upon period of years – providing Area One investors with returns on investment while leaving the farmer with a more profitable and larger operation.

Because the newly acquired land is owned through the partnership, it protects the farmers from the risks associated with renting land including real estate market fluctuations, according to Area One’s website. The structure also dilutes the risk of expansion for farmers in the face of unpredictable weather and interest rate fluctuation, while enabling them to better initiate long-term planning.

IV and V

Area One Farms is launching Fund IV as a vehicle to offer Canadian institutional investors access to investments in farm partnerships throughout Canadian provinces where institutional investment is allowed by law and welcome by farmers.

The fund is being launched with a cornerstone investment of $100 million, and will be structured as a 10-year, closed-end fund.

Fund V will have a more targeted geographic mission, offering Canadian individuals, private corporations, or trusts that have 100 percent Canadian beneficiaries exposure to farm partnerships only in the provinces of Manitoba and Saskatchewan. Its structure will be as a perpetual entity with liquidity options beginning in its fifth year.

“We believe that an operator should always do better working with Area One Farms than they could on their own,” said Area One Farms President and CEO Joelle Faulkner. “We’re excited to launch these new funds and to continue to build strong partnerships with Canadian farmers.”

Area One’s third fund, Area One Farms Fund III, saw a close of $130 million in July of last year. At the time, Area One stated that the commitments to this fund would enable it to broaden its plans, with expectations to launch between 10 and 15 joint ventures with crop and cattle producers in Alberta and Ontario, Canada, as well as possibly diversifying its investments into regenerative agriculture; exploring agtech investing through testing a farm data management system; and the initiation of group-buying of ag inputs to gain economies of scale.

-Lynda Kiernan