SDG Farmland Fund Makes First Investment in South America and Expands in New Zealand
The Kempen SDG Farmland Fund of Van Lanschot Kempen Investment Management has made two new investments which contribute to the fund's return and sustainability objectives. With the purchase of a water-rich and diverse farm in Uruguay, the fund enters the South American market. The addition of an organic apple orchard in New Zealand further contributes to the diversification of the portfolio.
The Kempen SDG Farmland Fund (AuM of €457.4 mn*) invests globally in farmland, and focuses on promoting regenerative agricultural practices. This involves improving soil health, protecting and enhancing biodiversity, and reducing greenhouse gas emissions. Portfolio managers, together with the local partners, are directly involved in the realization of the sustainability goals of the acquired agricultural companies.
New Zealand: Whether it's kiwis, cherries, or onions, New Zealand is widely renowned for its high quality agricultural products, often destined for export to all parts of the world. The fund had the opportunity to further expand its investments in Oceania with the organic Gold Water Orchard after grower John Bostock offered part of his acreage for sale to raise capital.
Bostock is the largest organic apple producer in New Zealand, renowned for his sustainable farming practices and dedication to environmental stewardship. He will remain responsible for managing the apple orchard and selling the harvest, which includes Granny Smith, Braeburn, Fuji Lady in Red, and Honeycrisp apples. The latter variety, in particular, is highly sought after in the United States.
Gold Water Orchard, totaling 62 hectares, is already fully organically managed, paying particular attention to water efficiency. Plans are in place to soon add an indigenous forest area to better support the natural flora and fauna.
Uruguay: The purchase of the more than 1100-hectare farmland of La Palma, in the department of Rio Negro, gives us the opportunity to implement a sustainable strategy and regenerative agricultural practices in South America. Thanks to a favorable climate, very high-quality soil and an abundance of water, two harvests per year can be achieved here. This is done through a rotation of soybeans and corn, alternated with grass to allow the soil to rest and regenerate. In collaboration with the tenant and external specialists, we will take further steps here to achieve our regenerative sustainability goals.
One of the standout features of La Palma is the presence of a large dam. Currently, only 20 percent of the dam’s capacity is used, providing potential for further commercial opportunities.
We see this acquisition as an exciting opportunity, not least because Uruguay has a stable political and economic climate, with regulations which meet the high standards of institutional investors.
General risks to take into account when investing in Farmland
Please note that all investments are subject to market fluctuations. Economic downturns and market fluctuations can significantly reduce returns and affect rental income, property values, and dividend payments. Environmental, social, and governance events can negatively impact investment value and overall portfolio risk. Farmland investments have a low vacancy risk, but asset allocation and investment selection can affect returns. Farmland is not a liquid asset class, and external factors may also affect the liquidity of individual farms. Tenant defaults can affect returns and working capital. Currency exchange rates can impact the asset value of the Fund. Government-related risks, including taxation and legislation, can affect financial performance and investment returns. Incorrect asset valuation can negatively impact the Fund's return.
Disclaimer
This is a marketing message. Van Lanschot Kempen Investment Management NV is authorised as a management company and regulated by the Dutch Authority for the Financial Markets (AFM). The Fund is registered under the license of Van Lanschot Kempen Investment Management NV at the Dutch Authority for the Financial Markets (AFM). The Fund is notified for offering in a limited number of countries. The countries where the Fund is notified can be found on the website. The Fund is only available for professional investors. The information in this document provides insufficient information for an investment decision. Please read the the prospectus (available in English) and the sustainability-related disclosures before making an investment decision. These documents of the Fund are available on the website of VLK (vanlanschotkempen.com/en-nl/investment-management/fund-library) The information on the website is (partly) available in Dutch and English. Here you can also find our sustainability-related disclosures.
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Capital at risk. The value of investments and the income from them can fall as well as rise, and investors may not get back the amount originally invested. Past performance provides no guarantee for the future.