By Lynda Kiernan
The staff and Investment Committee of Massachusetts Pension Reserves Investment Management Board (MassPRIM) have unanimously approved Prudential Agricultural Investment (PAI) as an investment manager for PRIM’s Real Asset Portfolio.
“PRIM staff and the Investment Committee recommend (unanimously) to the PRIM Board that the Board approve Prudential Agricultural Investments as an investment manager for PRIM’s Real Assets portfolio, subject to satisfactory completion of final contractual negotiations,” said MassPRIM.
This move, outlined in the minutes of the pension’s February 26th meeting, brings with it capital commitments from MassPRIM of up to $500 million for PAI, which was unable to comment at the time of this reporting.
With assets under management of $1.1 billion as of September 20, 2019, and offices spread across key agricultural regions of the U.S., PAI’s portfolio totals 129,089 acres diversified across 15 crops – 92 percent of which are permanent crops including almonds, oranges, pistachios, walnuts, lemons, wine grapes, avocados, apples, table grapes, pecans, nectarines, and cherries.
Targeted properties are considered for their climate, water availability, soil risk, and the market demand (both domestic and international) for its particular crop, with expectations of returns between six and 10 percent, and capital appreciation of 2 percent over the life of each investment.
As a manager, PAI works through a direct operating framework, believing that by engaging its skilled management in the direct operation of its portfolio properties, it will be better able to mitigate risk and achieve higher returns compared to alternative management structures.
Each of PAI’s senior managers averages 20 years of experience in institutional farmland investing and the management and development of a range of crops. Its dedicated property management unit – Capital Agricultural Property Services (CAPS) – participates in acquisition due diligence, securing tenants, supervision of crop programs, conservation measures, insurance and water management, the supervision of capital improvements, maintenance and repairs, the development of operating plans, crop marketing plans, the preparation of annual budgets, cash flow projections, accounting and pest and disease control protocols.
– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.