Bonnefield Launches New Open-Ended Farmland Fund; Announces First Close
March 14, 2017
Toronto-based Bonnefield Financial has announced the formation of Bonnefield Canadian Farmland Evergreen LP – a new open-ended farmland fund designed for Canadian investors.
The new fund was created through the integration of assets of two of Bonnefield’s established closed-ended farmland funds – LP I, which was created in 2010, and LP II, which was launched in 2013. Through the combination of these assets into an open-ended structure, it will form an investment vehicle that can offer enhanced re-investment, diversification, and liquidity for investors.
Concurrent with the launch of Bonnefield Canadian Farmland Evergreen LP, Bonnefield also announced the fund’s first close on January 1, 2017. Through this closing, additional commitments on behalf of existing investors now bring Evergreen LP’s combined net assets to $80 million, and form a farmland portfolio that includes land in Alberta, Saskatchewan, Manitoba, Ontario, and New Brunswick.
Established in 2009, Bonnefield sources, assesses, manages, and finances farming operations across Canada, and is the top land-lease finance facilitator in the country – providing the capital needed by Canada’s agricultural producers to achieve their targeted growth. Bonnefield’s current $400 million portfolio includes more than 80,000 acres of Canadian farmland, leased back to more than 70 tenant farmers across British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, and Nova Scotia, according to the company website.
Last month, on February 9, Tom Eisenhauer, CEO of Bonnefield, and Wally Johnston, Bonnefield’s vice president of business development, appeared before Canada’s Standing Senate Committee on Agriculture and Forestry. This committee is currently conducting the “Study on the acquisition of farmland in Canada and its potential impact on the farming sector,” an undertaking to determine the potential effect that institutional investment has on the country’s farmland. (Please see a transcript of their testimony here)
During his testimony, Eisenhauer stated that Bonnefield has determined through land mapping that the total value of Canada’s farmland totals $590 billion – exceeding value estimates by Statistics Canada of $400 billion. Meanwhile, total dollars invested by institutional and high-net-worth individuals in farmland in the country over the past decade are estimated to total $1 billion – meaning that less than 0.25 percent of Canadian farmland is owned by institutional investors. Furthermore, Bonnefield estimates that institutional purchases of Canadian farmland account for merely 0.5 percent to 1 percent of total farmland transactions per year – indicating that institutional transactions are not likely able to influence prices on the farmland market.
In the footsteps of Bonnefield’s institutional limited partnerships – LP III, which saw its first close in 2013 at $100 million, and LP IV, which announced it first close in August 2016 with $60 million, Evergreen LP will offer Canada’s farmers land-lease financing to provide them with the necessary capital to reduce debt, improve profitability and realize growth.
“Bonnefield uses capital from Canadian individuals and Canadian institutions to support Canadian farmers and to ensure that high-quality farmland is protected as “farmland for farming,” said Eisenhauer.
The fund will remain active in building-out its portfolio of high-quality farmland, mainly through non-leveraged sale-leasebacks, and will pursue diversification through differing geographies, crop varieties, and tenants. Long-term cash and flex leases will be employed to mitigate the exposure to farm operational risk.
Bonnefield will continue to accept subscriptions for Evergreen LP through 2017.
Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration please contact Ms. Kiernan at email@example.com.
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