Swedish and US Pensions Partner in Agricultural Real Estate Deal

Swedish pension fund AP2 has decided to establish a joint venture with US pension fund/asset manager TIAA-CREF, with a goal of investing in agricultural real estate in the USA, Australia and Brazil.

(May 25, 2011) — The Swedish pension fund AP2 and US pension manager TIAA-CREF have partnered in an agricultural venture.

The investment comes as real estate is continuing to rebound globally while environmental, socially responsible considerations are becoming more important to investors. While AP2, which has a $35 billion portfolio, will invest $250 million, TIAA-CREF, which manages a portfolio of roughly $400 billion, will serve as majority shareholder and administrator.

“TIAA-CREF has a well-developed platform for agricultural investment where environmental considerations and social responsibility are integrated. The Second AP Fund has carried out a comprehensive sustainability analysis of TIAA-CREF’s guidelines, policies and processes and considers that they are of very high quality,” AP2 said in a release. The fund added: “The return on agricultural real estate is expected to be stable, with low covariance with the Second AP Fund’s other investments, such as equities and bonds. This will serve further diversify the Fund’s portfolio risk.”

The funds will invest primarily in grain production assets in the US, Australia, and Brazil, which ranks even above China as the premier emerging market destination for private equity investors in the next 12 months, according to a recent survey.

AP2’s CEO Eva Halvarsson adds: “We anticipate that the newly established company’s investments will promote productivity gains and long-term, well-managed and profitable agriculture that, in a sustainable manner, will help meet the growing global demand.”

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742