Terra Nova FCR
Investment Sector
Agriculture
Investment Profile
Farmland (Buy & Lease)
Minimum Investment
€100,000
Subscription Deadline
September 2024
Fund Lifetime
8 Years
Open to US Citizens
Yes
Fund Manager
Quadrantis Capital
CMVM License Number
1824
Q&A
Each fund manager or fund advisor has been invited to answer a series of questions about their own funds as well as the market in general.
We sat down with David Alves and to find out more about Terra Nova FCR.
Terra Verde and Quadrantis Capital are part of the fund’s management team and both teams bring complementary experience to Terra Nova fund management.
Terra Verde Capital is a leading agriculture asset manager in Iberia with decades of farmland experience. Our team has been invested in agriculture for over 50 years and currently manages more than 14.000 ha of diversified farmland in Portugal, with more than €200M of principal investments to date. A key feature of Terra Verde Capital is that all we do is agriculture land investments and asset management which provides us a unique sourcing edge and unmatched local market knowledge when analyzing and opportunistically acquiring agricultural land. Terra Verde Capital, as a knowledgeable partner in the agribusiness sector, will be the General Partner and the Investment advisor of the fund and will be responsible for sourcing, analyzing and executing the investments.
For Terra Nova FCR, we are partnering with Quadrantis Capital, a venture capital management firm regulated by CMVM that counts with +30 years of experience and a track record of +€200M AUM in Portugal. Quadrantis Capital is Terra Nova’s fund manager and will be responsible for all the regulatory work and reporting to investors. As a well-established fund manager registered with the CMVM, Quadrantis Capital enforces the highest standards of regulatory compliance and will independently scrutinize the fund’s investment decisions to ensure that investors’ interests are well preserved.
Why did you decide to create this fund?
Population growth, increasing household incomes, climate change, water scarcity and declining arable land are all putting pressure on the world´s most critical resource: food. At Terra Verde we focus on securing strategic, high quality arable land with ample water resources in investor friendly jurisdictions. We believe that the value of irrigated land will appreciate exponentially as the food crisis exacerbates, making the present environment, now more than ever, an attractive time for investors to diversify their portfolios into farmland.
Terra Nova FCR capitalizes on these fundamentals by offering investors the opportunity to earn European citizenship through investments in income generating farmland, an asset class that has consistently demonstrated robust financial returns with low volatility and strong capital protection during periods of economic turmoil.
Aside from the financial merits of investing in farmland, Terra Nova FCR holds a great value to us in the form of “Positive Impact Investment”. Agriculture investments offer a route for investors to participate in the consolidation of the sector and in the much-needed green remodeling that our society needs, contributing to fulfilling Terra Verde’s investment objectives of supporting inclusive and sustainable growth in agriculture.
Has the management/advisory team invested in Terra Nova FCR? Please explain that decision.
Yes, Terra Verde Capital and the management team will invest up to 20% of the target fund size (€150M), guaranteeing complete alignment of incentives with investors.
Request a detailed presentation about the fund
· Min investment:
€100,000
· Lifetime:
8 Years
· US Citizens:
Yes
· Subscription deadline:
September 2024
Terra Nova is an agricultural fund with a specific focus on buying and leasing agricultural land. Please explain your thought process behind this decision.
We believe that agricultural land with secure water supplies will become a very scarce and valuable asset in the near future. Investing now in irrigated farmland represents a true opportunity of combining cash flow stability with real appreciation of the underlying land assets.
At Terra Nova, we aim to capitalize on this opportunity, while de-risking the investment to preserve capital for our investors. On that basis, the funds offers a defensive strategy of buying and leasing productive land to farmers that can demonstrate a strong track-record of operating history, quality credit ratings and high ESG awareness.
Our integrated strategy enables us to contractually guarantee stable and recurring rental income for investors, while also capitalizing on land value appreciation over the life of the fund. On top of that, we contribute to make an impact on environment, rural communities and in the sustainability of the agricultural system by incorporating into our investment policy ESG best practices, aligned with international policy standards and the Sustainable Development Goals.
How will you score the ESG suitability of your land investments? What type of criteria will you use?
Terra Nova's investments generate consistent returns with high ESG awareness and the potential sustainability and the ESG related risks of our investments are constantly monitored by our management team with the support of technical experts. Our ESG strategy is integrated across our investment lifecycle, from opportunity generation to investment execution and reporting. Key considerations that we will take into account when scoring the ESG performance of our investments are:
Pre-Investment: We will do internal land analysis to ensure that farms have the necessary environmental conditions to support crop growth (supportive weather conditions, soil quality, access to water secured supplies) without compromising local ecosystems and communities and we will prepare an environmental impact study for each of our farm investments to improve the forests around and preserve the natural values in the area.
Tenants Screening/ Selection: The tenant’s projects will be scored based on their proposed ESG Initiatives. We will favor projects that promote the environment, contribute to the sustainability of the selected crops and develop the local communities. This may include using regenerative practices to improve soil structure and reduce chemical emissions; investments in technology to promote a more efficient use of water resources or hiring staff from local villages around the properties and having in place social insertion programs for the local communities.
Reporting: Each property will have its own sustainability plan and the ESG performance of the investments will be measured using concrete KPIs, that are verified by an independent local ecological consultant. These KPIs will be included in the sustainability plans and will be aligned with the proposed ESG initiatives of the projects.
How would you describe Terra Nova FCR's' risk profile; Conservative, Moderate, or Ambitious?
Terra Nova FCR seeks a conservative risk profile. It is oriented towards cash flow generation and the capital appreciation upside of the underlying land assets. The Fund seeks diversified risk exposure to the agricultural land market and provides a safe route to the Golden Visa Program due to its strong capital preservation properties and superior risk-adjusted returns.
The Golden Visa rules state that a qualifying investment must be held for just five years but Terra Nova's lifetime runs for longer. Could you please explain your fund lifetime including the launch date and subscription period?
According to the Portuguese Golden Visa rules, the fund’s investment maturity should be at least five years to qualify for the Golden Visa program.
Terra Nova FCR was created on September 30th, 2022 and has a lifetime of 8 years (until 09/2030), which can be extended for two additional years, by investor’s vote. The subscription period runs for two years (until 09/2024).
The terms of the fund were defined to allow sufficient time for the realization of the expected returns and the selection of investment opportunities with the desired quality and necessary performance of the invested assets, while meeting the Golden Visa requirements.
In general, some investors are cautious because of the funds' lock-in periods. How do you plan to deal with investors who wish to exit Terra Nova FCR before its full lifetime?
The Fund does not allow early redemption. It is possible to negotiate the participation units in a secondary market; however, the investor must find someone willing to purchase its shares.
In such case, participation units can be freely transferrable to qualified investors who are compliant with the fund’s KYC process, allowing investors flexibility around when to exit the fund.
What distinguishes Terra Nova from other Golden Visa-eligible agricultural real estate funds from others operating in the market?
Terra Nova FCR brings together a Fund Management team with distinctive capabilities and expertise in farmland management that cannot be found in other agricultural funds operating in the market.
As a knowledgeable player in the agribusiness sector, Terra Verde Capital will be the GP and investment advisor of the fund. Terra Verde Capital’s team has been invested in agriculture for over 50 years and is currently managing +14.000 ha of diversified farmland in Portugal. Due to our strong track record and deep roots in Portuguese agricultural sector, we have a unique sourcing edge when analyzing and opportunistically acquiring agricultural land, which has been allowing us to secure high-quality land at very attractive prices.
Our team will be led by experienced professionals with decades of investment and farmland experience that will run all the due diligence process for each farm to validate the water availability, quality of soils and water restrictions. On top of that:
We promote high ESG and Positive Impact standards and seek to contribute to UN Sustainable Development Goals. We are fully committed to food security, climate change, diversity, work conditions and other key SDGs, particularly given the magnitude of the impact that Agribusiness has on such critical matters.
We count with a vast network of different agribusiness stakeholders, including large agricultural companies (Sugal, Aquaterra) landowners and local advisors (CBRE, Consulai, Agroges), that support us with an extensive source of land opportunities.
The team has been strengthened by a non-executive Advisory Board formed by well-known individuals with over 20 years of hands-on experience in agribusiness, financing and entrepreneurship bringing undisputed know-how to the investments.
We established a strategic partnership with Quadrantis Capital, as the fund manager, a well-known player in this area with a track record of more than €200m of AUM that will take responsibility over all the administrative and regulatory work as well as investors onboarding, KYC work, relationship with accountants, auditor and the regulator.
Get in touch with
Terra Nova FCR
now!
· Min investment:
€100,000
· Lifetime:
8 Years
· US Citizens:
Yes
· Subscription deadline:
September 2024
Although Portugal is your focus, we understand that Terra Nova FCR will also look to invest in Spain and the USA. Could you please elaborate on that?
Terra Nova’s investment focus will actually be in the Iberian region. This is explained by two mains reasons:
On the one hand, we have strong roots and deep operational expertise in the Iberian market, which allows us to swiftly capitalize investment opportunities and optimize value creation for the fund.
On the other hand, Iberia combines many factors that make it one of the best regions to invest in irrigated farmland opportunities within Europe.
The agriculture sector in Iberia is in high expansion with increased export activities and growth rates above the economy
Iberia combines unparallel conditions to grow crops- perfect climate conditions, high quality soils and abundant ground and surface water resources. The region not only lies on top of the prime European aquifers but is also served by the largest water reserve in Europe - the Alqueva - with a total capacity of + 4 billion cubic meters
The market is still highly fragmented and unsophisticated with multiple opportunities for professional investors to access opportunistic land deals
Iberia’s land market remains significantly undervalued with prices that are 60% lower than the European average. Investors in Iberian farmland will be well positioned to benefit from the ramp up of farmland prices over the next few years, as Iberia’s recent efforts to modernize the sector accelerate the convergence to other EU countries
On an opportunistic basis, we may also look to invest in other investor friendly jurisdictions, like the USA, as a way to diversify our portfolio of investments, but this will never exceed a 40% allocation at the fund level.
Many of those considering the Golden Visa are currently comparing funds vs direct real estate investments. What advice can you offer to help investors make the right decision for them?
The Fund provides Golden Visa investors with an attractive alternative to direct real estate investment, with several advantages:
Diversification Benefits - Funds such as Terra Nova have the strategic advantage of enhancing diversification into safe sectors vis-à-vis exposure to a single property
Higher transparency and degree of external scrutinity into the asset values by investing in a regulated, audited fund with independently appraised assets and full transparency on commissions.
No miscellaneous fees - Investors avoid the management and financial load of overseeing the properties, managing rentals, paying taxes and management costs associated with property ownership.
More favourable tax regime - Foreign investors are exempted from tax withholdings on capital gains and distributions and do not need to submit any Portuguese tax returns
Lower Risk - Principal investments are much more protected in funds such as Terra Nova FCR which are not exposed to boom and bust cycles, in the way that real estate is.
Overheated Market - Real estate Golden Visas have driven the housing market into over-inflation. Overheated real estate markets expose investors to undesirable and unnecessary risk of losing their principal investments.
For people who are unfamiliar with investing in funds and may even be nervous about learning, what advice would you like to give them?
We know that investors need safe and risk-free mechanisms to receive the premium of an EU passport. To that end, European Union offers some of the most stringent consumer and investor protection laws in the world. As part of the EU, Portugal is a highly regulated financial market and the fund’s activities are subject to multiple layers of external security. For Terra Nova FCR:
Securities Market Authority (CMVM): CMVM independently regulates and scrutinizes the fund management institution and the fund
External Auditor: Deloitte independently audits Terra Nova FCR, at the level of its accounts and investments made, and reports transparently every year
External Valuation of the Investments- Quadrantis Capital, the fund manager, exercises a policy of requiring external valuation and audit prior to any investment.
Considering the recent Golden Visa rule changes in October 2023, what advice would you give to investors who are currently looking into the program?
In general, the rule changes introduced on October 2023 have created some structural effects into the proceedings of the program. By removing the investment in real estate, we believe that the changes have made the fund option an even more attractive alternative for those considering to apply to the Portuguese Golden Visa program.
Is there anything else you would like to share with potential investors?
We are available to share with investors all the necessary information prior to making an investment decision. We do provide access to exclusive investment materials after an introductory call and we are fully available to guide the investor along the entire process, not only during the investment decision but also while being an investor with Terra Verde Capital, with active flow of information shared through formal reporting and direct contact with the team members.
Sounds good! I'd like to get in touch now!
· Min investment:
€100,000
· Lifetime:
8 Years
· US Citizens:
Yes
· Subscription deadline:
