Agcapita Update: Farmland Attracting Pension Funds But Political Risk is a Big Concerm

Calgary, Canada, October 27, 2014 --(PR.com)-- According to the FT in a recent article there is increasing institutional interest in farmland but political risk is factoring strongly into market selection. So while some merging markets might appear competitive on price and productivity, poor land titles systems and high political risk make them off limits to conservative investors. For instance, according to the article "Ukraine, known as the breadbasket of Europe, looks attractive from an agricultural point of view because its rich black earth combined with less than state of the art farming techniques holds out the promise of significant yield improvements, but the recent political upheavals mean it is far from the watch list of most institutional investors."

Stephen Johnston, founder of Agcapita, commented, "Political risk and fundamentally discounted productivity costs were key attributes in our selection of the western Canadian farmland markets as our investment focus. We have always believed that political risk will be a factor in farmland returns and clearly such risks are low in the Canadian market. Agcapita is currently on its fifth fund and has already achieved a highly successful exit from its first fund. Farmland continues to gain attention as a useful portfolio addition for pensions and family offices - investors with long-term horizons and who seek stable returns and unique portfolio diversifiers. CPP's investment represents one of the first forays by a large Canadian institutional investor into domestic farmland investments and bodes well for the future of the Canadian market. Agcapita believes that prices of Canada farmland, in particular Saskatchewan farmland, are discounted to world averages for a ton of productive capacity. Part of our investment premise is that this gap will close and with the attention that Canadian farmland is receiving from investors it can obviously happen quite quickly. It is this 'margin of safety' return driver that attracted us to Canada and Saskatchewan in the first place."

According to Karim Kadry, Agcapita’s Investment Manager, "Agcapita believes that farmland will continue to show great appeal to conservative investors concerned with inflation and the volatility of their existing public equity investments. Canadian farmland has similar inflation hedging qualities to gold but with an ongoing cash yield that gold lacks. We are now seeing large institutional investors recognize these qualities with CPPIB acquiring 120,000 acres of Saskatchewan farmland in a single transaction worth in excess of $120 million."

Johnston added, "Canadian farmland returns have exhibited low volatility and this combined with higher absolute returns equate to a favorable Sharpe ratio. Agcapita’s funds directly hold diversified portfolios of farmland in western Canada, and in particular in the highly price competitive province of Saskatchewan. Agcapita’s funds give investors the benefit of a direct investment in farmland combined with a model of front-end loaded cash rents. Agcapita is one of Canada's most experienced farmland fund managers, launching its first fund in 2008."

Further to this Agcapita is pleased to announce that Agcapita Fund V has launched. Agcapita Fund V and is the only RRSP eligible farmland investment vehicle in Canada. If you would like to receive information about Agcapita Fund V please feel free to contact us at Fund5@agcapita.com or register online at the Agcapita website.

This news release may contain certain information that is forward looking and, by its nature, such forward-looking information is subject to important risks and uncertainties. The words "anticipate," "expect," "may," "should" "estimate," "project," "outlook," "forecast" or other similar words are used to identify such forward looking information. Those forward-looking statements herein made by Agcapita, if any, reflect Agcapita's beliefs and assumptions based on information available at the time the statements were made (including, without limitation, that (i) the demand for agricultural commodities will continue to grow at a pace that is unlikely to be matched by growth in agricultural productivity, and (ii) investment demand for tangible assets such as agricultural commodities and farmland will continue to increase for the foreseeable future). Actual results or events may differ from those anticipated or predicted in these forward-looking statements, and the differences may be material. Factors which could cause actual results or events to differ materially from current expectations include, among other things: risks associated with the ownership and operation of farmland, including fluctuations in interest rates, rental rates and vacancy rates; general economic conditions; local real estate markets; supply and demand for farmland; competition for available farmland; weather; crop diseases; the price of grain and other agricultural commodities; changes in legislation and the regulatory environment; and international trade and global political conditions. Readers are cautioned not to place undue reliance on any forward-looking information contained in this news release (if any), which is given as of the date it is expressed herein. Agcapita undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise.