Launched in 2016, the first closed-end fund of the ALAL Trust has grown by 12.6% on an annualized basis. The portfolio holds 83,000 acres of productive farmland in Saskatchewan valued at $175 million. With that fund now closed, Avenue Living is set to launch a new open-end investment vehicle to provide investors indirect exposure to farmland.
“The largest pensions and institutions, and some ultra-high-net-worth investors both in the U.S. and Canada, are making large acquisitions in the agricultural land space,” Millard says. “Food security is becoming more important than ever, and returns from agricultural land have outpaced inflation over a 20-plus-year period.”
Beyond answering investors’ call for diversification, the ALAL Trust addresses a pressing need within Canada’s farming community. Many farmers are looking for opportunities to expand their operation, while other older operators may be looking for opportunities to exit. As would-be buyers don’t always have access to the capital needed to acquire neighbouring plots of land, the ALAL Trust is able to come in and help bridge the gap.
“Through Avenue Living’s institutional research, legal, and accounting teams, the ALAL Trust is able to access the same equity and debt capital markets as we do for our other operating businesses,” Millard says. “We acquire farmland and rent back to farmland operators. We are not operators ourselves, but we work very closely with them.”
According to Millard, farmland in Saskatchewan has more favourable cap rates than other provinces. That gives the Trust added flexibility to prudently use leverage in its acquisition strategy, providing its investors with exposure to more productive farmland for their investment dollar.
