Nuveen, one of the largest investors in agricultural property, is turning its attention to retail capital with the launch of a new farmland REIT. The firm is seeking to raise as much as $3 billion from accredited investors, according to an SEC filing earlier this month, positioning farmland as an investment opportunity driven by rising global food demand and limited land supply. CoStar reported that Nuveen ranks among the most prominent investors in the sector.
In the filing, the asset manager noted that the supply of the sector available for production is constrained and often requires significant investment to become productive. The company also cautioned that the quality of the product continues to be lost to urban development, pushing investors toward select geographies expected to offer long-term value.
The offering comes after five years of steady gains in sector values, though recent data shows that growth has begun to slow. Still, Nuveen projects that advances in farming technology and faster adoption of efficient practices could help reduce production costs or increase yields, supporting farmer profitability and the value of underlying land. The company added that marginal farmland is likely to struggle under production challenges, further lifting demand for higher-quality acreage with competitive advantages.
Nuveen emphasized that investments in the area are also effectively an investment in water resources, which it cited as a critical driver of returns. The firm noted, citing estimates, that more than 80% of the world’s population will reside in Asia and Africa by 2100, as both regions face significant water scarcity risk. As a result, farmland in locatons with sustainable, rain-fed or irrigated water supplies is expected to see stronger valuations.
The fund will target leased and related agricultural real estate producing food or fiber, while also pursuing investments in infrastructure for water access, storage and distribution. Historically, the firm pointed out, U.S. row crop investments have concentrated in six regions: the Corn Belt, the Delta, the Southeast, the Mountain West, the Pacific Northwest and the Pacific West, each with distinct investment characteristics.
The new vehicle will be structured as a perpetual-life, non-listed REIT, with shares sold monthly continuously at prices tied to the prior month’s net asset value per share. A Nuveen affiliate intends to participate with at least a $25 million investment in exchange for Class A-I shares.
Farmland REITs remain a relatively small segment of the real estate investment landscape. CoStar reported that there are currently two of such publicly traded in the U.S.—Farmland Partners, with a market capitalization of about $480 million, and Gladstone Land, with a market capitalization of about $330 million.
The appeal of farmland extends beyond domestic institutions. According to the latest data from the U.S. Department of Agriculture, as of December 31, 2023, foreign interests held nearly 45 million acres of U.S. agricultural land, equal to 3.5% of all privately held farm property and 2% of the nation’s total land area. That represented an increase of 41.5 million acres from the prior year, with holdings split among forest (48%), cropland (29%), pasture and other agricultural land (21%) and non-agricultural land (2%). Since 2017, foreign acquisition of agricultural land has averaged nearly 2.6 million acres annually, according to USDA figures.
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