Wall Street Heavyweight Makes Big Move in Farmland
TIAA-CREF buys controlling interest in Westchester Group, as investor interest in agriculture grows.
Bryce Knorr
Published: Oct 7, 2010
One of the biggest names in the financial industry made a major move into agriculture today, confirming Wall Street's renewed interest in the food and fiber sector.
TIAA-CREF, which provides an array of retirement services in the government and non-profit field, announced it acquired a controlling interest in Westchester Group, an Illinois-based company known for brokering and managing farmland.
While TIAA-CREF, which manages over $400 billion in assets, is no stranger to agriculture, today's move gives it a strong platform for making additional investments. The company said it already has a stake in more than 400 farms in the Americas, Australia and Eastern Europe. Westchester has managed investments for TIAA since the firm began its ag portfolio, the company said.
Westchester, based in Champaign, IL, began as a farmland broker and management company in 1986, and quickly expanded into high profile auctions, handling some of the biggest sales of farmland in the U.S. It also has an international presence, recently forming an Australian subsidiary.
While TIAA markets mutual funds, IRAs and other services, its farmland portfolio is kept inside an insurance division. The insurance industry has long had an interest in owning farmland, because it provides a stable return and potential for appreciation, something not available in volatile stock and bond markets. More recently, pension funds and other institutional investors have moved into ownership of commodities, triggering a massive flow of money into the futures market over the last five years, often through passive investment in index funds.
"Farmland, with its historically stable returns, differs from other asset types in its market cycles and can potentially reduce volatility relative to a well-diversified portfolio of stocks, bonds and real estate as well as provide a hedge against inflation," TIAA said in a press release today.
While insurance companies were once a major source of mortgages for farmers, TIAA said its focus would be on "acquiring equity ownership in the underlying farmland."
For more on the announcement, go to www.tiaa-cref.org/public/about/news/articles/gen1009_236.html
For more on Westchester, go to www.westchester-group.com/.
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