Reuters | 9 November 2010
By Carey Gillam
BOSTON, Nov 9 (Reuters) - U.S. investment adviser Optima Fund Management is picking up new U.S. farm properties at a brisk pace as it prepares to take public its farmland real estate investment trust, a top Optima executive said Tuesday.
"There are a lot of institutional investors who are recognizing the opportunity here," Optima Fund Management Executive Managing Director Tom Gimbel said in a presentation Tuesday to a gathering of agricultural investors. "I think we are at an inflection point."
Optima, a $4.5 billion private investment firm specializing in hedge funds, started investing in U.S. farmland about two years ago, but it still comprises a small percentage of its portfolio.
Optima intends to list its American Farmland Co REIT in the next three to four years, Gimbel told the Agriculture Outlook Americas conference in Boston. He said Optima has been talking with investment banks and underwriters about the prospects, which appear to be "extremely good."
Optima is not the first to push for a public farmland REIT. Gladstone Land Corp, a REIT focused on agricultural properties, in August filed plans with U.S. regulators for an initial public offering on Nasdaq under the symbol "LAND." [ID:nSGE6750KF]
As it prepares for its own offering, Optima's farmland REIT is diversifying its farmland holdings across the United States, with ownership of 12 different crop varieties, including corn and soybean farms in Illinois, and a vineyard in Monterrey, California.
Optima currently is close to completing the acquisitions of a vegetable farm in Florida, a rice farm in the Mississippi Delta and a walnut grove in California, according to Gimbel.
But the fundamentals for U.S. farmland are strong and growing, Gimbel said.
In a July report, Optima said it saw a long-term, "super cycle" for agriculture continuing for many reasons, including China's strong demand for U.S. grain, a growing world population that will continue to drive food demand, and a global scarcity for land and water for food production.
Gimbel said Optima is exploring international agricultural investment opportunities, but currently is focusing on U.S. farmland, what he called the "breadbasket of the globe."
U.S. farmland investments are seen generating lower returns than deals many other investors are pursuing in international markets, but are seen as far less risky, he said."We're starting with the U.S.," he said. (Reporting by Carey Gillam; Editing by Lisa Shumaker and Maureen Bavdek)