November 5, 2024

By Gerelyn Terzo, Global AgInvesting Media

Toronto, Ontario-based Area One Farms has achieved a major milestone. The Canadian ag manager has amassed C$127 million (US$91.6 million) to mark the first close of its flagship fund, Area One Farms Limited Partnership V. Attracting both existing and new investors, institutional investors and wealth managers across Canada flocked to the fund. Area One Farms will keep Fund V open to new investments throughout 2025 amid a target size of C$500 million (US$360.8 million).

Founded in 2012, Area One Farms partners with Canadian farmers to purchase land together and expand, a 180-degree turn on the conventional sale-and-leaseback models. The firm has remained true to its strategy to deliver enhanced and sustainable returns by investing in farmland through partnerships with Canadian farmers. Having restored over 40,000 acres of retired farmland, Area One operates farms in partnerships with bootstrapped growers with a view to transform distressed land into productive cropland, keeping the farm in the family for generations to come.

With an estimated 190,000 farms, nearly 100 percent of which are operated by families, Canada’s agriculture industry is out front for exports such as wheat, canola, mustard, flaxseed, lentils, peas and maple product markets. Representing 7 percent of the country’s GDP, Canada’s agrifood system is dependent on farms for hundreds of thousands of jobs in rural communities.

Area One Farms boasts over C$700 million (US$505.1 million) in assets under management across more than 180,000 acres through over four-dozen farm partnerships. CEO Joelle Faulkner graciously spent some time with GAI News for a brief Q&A:

1.) GAI News: Congratulations on the fundraising thus far! How would you characterize LP demand for Canadian farmland assets in a challenging environment?

Faulkner: “The fundraise for the first close was easier than expected. More investors are interested in adding farmland to their portfolio, and education on the asset class has been helped by the investment thesis being proven historically: farmland has provided attractive risk-adjusted returns with low volatility and inflation protection. The challenge for investors is finding an investment approach that can have strong ESG and impact outcomes. In Canada, a key component of that is whether the investment will benefit the farmers at least as much as the investors.”

2.) GAI News: Can you share more about Area One’s unique partnership model and what you hope to accomplish through Fund V?

Faulkner: “Over the last decade Area One Farms has proven that its equity partnership — which is very different than the traditional leaseback model — can deliver that win-win result for investors and farmers. Investors benefit from having an aligned and full-time partner, and the farm family builds equity so they can buy the investors out. Among other achievements, Area One has saved five farms from bankruptcy, and restored 40,000 acres of farmland. This fund is so exciting because it will enable us to keep doing that: benefitting more farm families and communities.”

3.) GAI News: How rewarding is this strategy for both for investors and farmers?

Faulkner: “Yesterday a partner thanked me for working with his son, who can see a path forward that was not possible any other way. When I built this business I wanted to prove that sharing value with the farm partner would deliver the highest investor returns. With Fund V, which we expect to reach C$500 million (US$360.8 million), we will be able to prove that over and over, each time helping a new family find a path for their next generation.”

GAI News would like to once again congratulate Area One Farms on reaching this impressive milestone and thank Faulkner for her contribution!

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