Ag giant Nuveen gulps down Treasury’s unwanted vineyard portfolio
by Larry Schlesinger
The world’s largest manager of farmland assets, Nuveen Natural Capital, has taken advantage of Treasury Wine Estates’ decision to downsize its commercial wine business after acquiring 434ha of its orchards in central Victoria.
Property records show Nuveen snapped up the 552ha Heathcote Vineyard Portfolio near Corop – about 60km north-west of Bendigo – for just over $14 million.
The vineyard portfolio included 434ha of plantings spread across three properties.
A separate undisclosed price was paid for a water entitlement totalling 945 megalitres.
The Heathcote portfolio comprises 552ha spread across three properties and 434ha of vines planted to a selection of grape varieties. These properties produce more than 4000 tonnes of grapes a year.
Russell Iles of Woodbridge Iles Property negotiated the sale on behalf of TWE.
“In the last six months we have acquired three vineyards in Australia which align closely with our investment strategy to diversify farmland investments,” Nuveen Natural Capital’s global boss Martin Davies told The Australian Financial Review.
“These investments expand on Nuveen’s considerable exposure to wine grapes in the US and leverage the significant expertise we have within our business in this space. There has been relative value in the Australian market in the last 12-18 months, partly due to China trade dislocation.
“Nuveen will manage these assets with sustainability and natural capital optimisation to the fore.”
A spokeswoman for TWE told the Financial Review the decision to sell the Heathcote vineyards was part of its plan to “right-size its footprint which included the divestment of some commercial vineyards. This has now been complete.”
Commercial vineyards produce wine priced below $10 a bottle, a category where sales have been declining as consumers favour more expensive offerings. TWE kicked off restructuring plans last year including asset sales and job cuts to focus on growing its premium brands. The winemaker is best known for its Penfolds brand, including its legendary Penfolds Grange.
More broadly, winemakers are battling numerous headwinds including an oversupply of grapes, supply chain delays, high-energy costs and the Chinese wine tariff, which has yet to be removed while China undertakes a lengthy review.
But while TWE and other winemakers are downsizing their Australian commercial portfolios, Nuveen, whose wider business includes investments in Australian student housing, healthcare property and fixed-income assets, has been growing its exposure to Australian agriculture, including horticulture.
The Heathcote vineyard acquisition bolts on to a $2.3 billion Australia portfolio spanning 70 properties (one in New Zealand) and 861,000ha of farmland. Eighty-eight per cent of its assets are leased-out row cropping properties, producing winter and summer cereals, oilseeds and cotton.
About 10 per cent of its portfolio is invested in horticultural assets, with only 1 per cent invested in wine grapes.
Nuveen acquired one of the country’s largest macadamia orchards near Bundaberg for more than $70 million at the end of 2022.
Australia accounts for around 13 per cent of Nuveen’s $16 billion global farmland portfolio, which comprises 448 properties in seven countries. By size Australia makes up almost a third of Nuveen’s 2 million acres (809,000ha) of farmland under management.
Investment manager Nuveen, which since 2015 has been owned by US teachers pension fund giant TIAA, established Nuveen Natural Capital in 2022 when it combined its farmland investment business Westchester Group, which has been investing in Australia since 2007, with its forestry business GreenWood Resources.
In an interview with The Australian Financial Review in August 2022 Mr Davies said the firm was keen to expand its exposure to Australian farmland.
This included increasing Nuveen’s permanent crop exposure alongside further investments in row-cropping and “strategies involving regenerative agriculture integrated with livestock as part of a more holistic approach”.
The investment company’s holistic approach to the environment encompassing the key elements of “natural capital”: air, water, soil, plants and wildlife.
“In the land management context, applying a natural capital lens can help mitigate the risk of causing unintentional harm in the single-minded pursuit of a certain objective,” wrote its head of sustainability, Cristina Hastings Newsome, in its 2022 Sustainability Report.