Global AgInvesting | 13 June 2023
Veripath acquires 4,100 ac. of farmland through Veripath Farmland (UR) Fund
By Lynda Kiernan-Stone, Global AgInvesting Media
Launched during the pandemic in mid-2020, Veripath Farmland Partners has already amassed a total of 115,000 acres under management on the predilection that global demand for agricultural products, including food, feed, fiber, and fuel, make farmland – particularly Canadian farmland with compelling valuation discounts and an ability to hedge both inflation and stagflation – a prime long-term investment.
Veripath’s approach is unique in that it takes an evergreen structure, enabling long-term investors, such as family offices or pensions and shorter-term investors such as retail, to gain access to farmland that they seek through the same vehicle.
It also manages its holdings through a dual-fund framework that divides Canada into two distinct geographies of approximately 84 million acres each:
Its (R) Fund invests only in Saskatchewan and Manitoba, while its (UR) Fund invests in the rest of the country in order to comply with ownership regulations that vary by province, and to offer a streamlined, simplified thesis for investors.
And as Veripath continues to execute a string of deals throughout what has been a busy year so far, it’s the firm’s UR fund that is grabbing the spotlight, acquiring 4,100 acres of farmland in Alberta, Canada.
Prior to this deal, Veripath announced it had acquired 640 acres of Saskatchewan farmland through its Veripath Farmland (R) Fund in March of this year, and acquired 3,026 acres in Alberta through its Veripath Farmland (UR) Fund.
In the midst of these transactions, Veripath also announced the launch of a new RRSP-eligible (Registered Retirement Savings Plan) farmland investment vehicle to provide access to the farmland investment class to a broader portion of Canadian investors.
“Based on historical performance data, farmland as an asset class may provide small and medium-sized investors with inflation protection, consistency in returns, and portfolio diversification benefits,” said Stephen Johnston, managing director, Veripath.
Johnston explained the benefits of such a strategy to GAI News, saying, “The advantage is that an RRSP eligible fund allows Canadian investors to put a farmland holding into their tax deferred federally regulated retirement pension accounts. Contributions to RRSP are only taxed on gains on withdrawal so they provide a material tax benefit.”
“Our new RRSP-eligible, open-ended investment vehicle allows a broad range of Canadian investors to benefit from farmland’s characteristics and do so in their RRSP accounts.”
RRSP-eligible investments will be limited to the Veripath Farmland (UR) Fund, which excludes farmland in Saskatchewan and Manitoba, but will offer investors maximum flexibility by including opportunities for both short- and medium-term hold periods running between 1-4 years.
It also will avail small-to-medium sized investors exposure to the multiple benefits of investing in Canadian farmland cited by Veripath, including:
Value – Canada is home to some of the most competitively priced farmland among developed nations, especially when viewed on a productivity adjusted pricing basis.
Diversification – Farmland has a low correlation to traditional stock and bond markets, providing an ideal mechanism to improve portfolio risk diversification.
ESG – Zero-till portfolios centered on Western Canada capture material amounts of carbon.
Demand – Farmland is a non-volatile class through which investors can capitalize upon the demands generated by population growth, and the global growing need for food, feed, fuel, and water.
Inflation hedging – Historically, farmland has presented strong hedging capabilities in the face of inflation/stagflation, and has outperformed (in real terms) during periods of low real rates/high inflation.
The real-time benefits of Veripath’s ESG initiatives have also recently been quantified and shared through the firm’s 2022 Portfolio Carbon Report, that outlines how its management resulted in the capture of 29,229 tons of CO2 – an action that has the implied value of $1.4 million and is the equivalent of taking 6,495 vehicles off the road.