TIAA-CREF, more commonly associated with teacher pension investments, has announced the creation of TIAA-CREF Global Agriculture LLC. The announcement - which came early last week - creates a new company that includes several international institutional investors and has $2 billion in commitments to investing in farmland in the United States, Australia and Brazil.
The company began investing capital in April 2011 and has a range of investors including British Columbia Investment Management Corporation, AP2, the Caisse de depot et placement du Quebec and others. TIAA-CREF has a significant stake in the company, and an affiliate of the firm - TIAA Teachers Advisors, Inc. serves as manager.
In a press statement announcing the deal, Jose Minaya, managing director and head of global resources and infrastructure investments on TIAA-CREF, says the firms "see increased protein consumption in developing economies and alternative energy mandates driving increased demand for food, fiber and fuel from a limited resource – land. Direct investment in farmland provides access to the key driver of food production. "In addition, we believe sustainable land management is imperative to help create value over the long term, and we employ best practices across our portfolio accordingly."
TIAA-CREF's expertise in global agricultural investment management. The company manages approximately $2.5 billion in high-quality farmland – more than 400 properties totaling 600,000 acres – in major grain-producing regions, including the United States, Australia, South America and Eastern Europe. These investments include capital previously deployed by TIAA-CREF. In addition, TIAA-CREF partners with local farmers and operators to manage and farm the properties, typically by leasing the land to farmers.
Minaya notes the move into land is a portfolio diversification and that "farmland offers investors excellent portfolio diversification given its low correlation to traditional asset classes like stocks and bonds."
Institutional investors own just 1% of farmland due to historically high barriers to entry such as low liquidity, limited reporting and research and a large number of off-market transactions. "TIAA-CREF offers investors access to this important, emerging asset class through a sustainable, transparent platform. Importantly, TIAA-CREF's interests are aligned with ours," said Anders Stromblad, head of external managers, AP2.