2022 Nuveen Natural Capital Sustainability Report: TIAA-CREF hits $2b in Australia

Australia’s third-biggest investor has seen its mammoth portfolio increase in value by about $200m in the past year.

An American superannuation company’s investments in Australian farmland has topped $2 billion for the first time ever.

Nuveen Natural Capital – an arm of the New York-based Teachers Insurance and Annuity Association of America and College Retirement Equities Fund – released its annual farmland sustainability report this week, which showed its Australian assets had increased in value to US$1.39b in December 2021.

The exchange rate in December meant the assets were valued at $1.94b in Australian dollar terms. At today’s exchange rate the assets realise A$2.05b, in addition to any increase in land values in the past six months.

In Australia, the biggest footprint from their 367,070ha portfolio is Western Australia with 186,104ha, followed by NSW with 138,523ha, Queensland (37,046ha) and Victoria (5394ha).

Last year TIAA-CREF’s Australian assets were worth $1.8b, with farmland value increases driving a $200m increase in the value of the portfolio, taking it to $2b.

TIAA-CREF is the biggest investor in farmland globally and the third-biggest investor in Australian farmland.

Globally, it had US$10.5b of agricultural and timber assets under management in December 2021 spread across 600 properties and 1.22 million hectares in 10 countries, according to the report.

Nuveen Natural Capital global head Martin Davies said more corporate investment into agriculture was necessary as the global population surges.

“Over the past 25 years, institutional investors have become increasingly interested in farmland and timberland, attracted by their strong, stable returns and inflation hedge characteristics relative to other asset classes,” he said.

“Investment in agricultural and forestry production must expand dramatically to keep pace with increasing global demand.

“Today’s 7.9 billion population is projected to rise to nearly 10 billion by 2050 – which means that by that time the world’s calorie and timber production will need to increase by an estimated 50 per cent and up to 200 per cent, respectively.

“How will our agricultural and forestry systems meet this challenge?

“Food, fibre and timber production gains must come from innovations – refining methods that already exist and creating entirely new ones.”

In the United States, TIAA-CREF had US$5.8b invested across 241,940ha, while in Brazil it owns assets worth US$2.2b spanning 443,270ha.

Australia ranked third in TIAA-CREF’s portfolio, with investments totalling US$1.39b across 367,070ha.

Of its US$10.5b portfolio, row crops is the most lucrative accounting for about 47 per cent of value followed by winegrapes (16 per cent), timber (14 per cent), sugarcane (12 per cent) and horticulture (11 per cent).

Nuveen received $100,000 cash payment as part of a Covid government stimulus package during the year, which it donated to local community projects, the report said.

Canada’s PSP Investments is Australia’s biggest investor with more than $5b in investments and Macquarie Bank’s various agricultural funds ranks second with $2.5b.