Talking Land Acquisitions and Water Management with Manulife Investment Management

By Michelle Pelletier Marshall, Women in Agribusiness Media (September 20, 2022)

Two experienced and knowledgeable professionals from Manulife Investment Management’s agriculture business—Danielle Harris, regional acquisitions manager, and Molly Thurman, water resources manager—operate literally in the field and on the farm. Manulife Investment Management is the world’s largest timberland investment manager,1 and the second largest manager of agricultural investments.2 The company has more than 30 years of experience demonstrating a commitment to the stewardship of the land and the communities in which it operates.

Harris, who relocated to California from Boston in early 2022, and Thurman, also located in California, work together each day in their efforts to secure additional properties to meet investor objectives and complement current Manulife Investment Management agricultural holdings. The pair focus on acquisitions in California—from tree nuts to citrus to wine grapes. And with a global portfolio of more than $4 billion in farmland assets covering over 400,000 acres of prime farmland across the United States, Australia, Canada, and Chile, there are a lot of variables that come into play with every acquisition.

WIA Today sat down with Harris and Thurman to get a better understanding of their roles at Manulife Investment Management, as well as how they came to be in these unique positions.

1) First, please provide brief background information as to how you came to your positions with Manulife Investment Management.

Molly Thurman [MT]: I started my career in environmental consulting, which primarily consisted of consulting on air and water quality issues in California. I always knew I wanted to be in water—it was my passion. Even before grad school, I'd always said, I'm Bakersfield born and raised and I’m going to go as far as I can in the world and then bring that knowledge back to my hometown. So that's what I did. I went to Columbia and came back with water knowledge. It took me a couple of years, and a lot of work, to break into the water world, but eventually I found my way to Manulife Investment Management where my capacities were really expanded.

I was born and raised in the heart of agriculture, and always knew I wanted to come back to it, though I honestly didn't know that I would be able to make a career out of water and ag only. I thought that I would always have to stay in a consulting realm where you need to oversee multiple topics or multiple clients. So I’m glad to see that a focus exclusively on water is possible.

Danielle Harris [DH]: In my second cooperative education position as part of my undergraduate degree at Northeastern University in Boston, I had a position within the commercial real estate team at Manulife Investment Management. It’s there that I learned I had a passion for real estate. I started in a full-time position in January 2012 with the commercial real estate team on graduation. After two years, I was recommended for an analyst position with the ag group.

Growing up, agriculture was not something that I was exposed to, but the position offered more of what I was looking for culturally. Everyone I've met is very talented and incredibly humble. And I think everyone at some level values the fact that their job is directly related to helping provide food for the world. The ag field wasn't something that I thought about when starting my career, but I know I want to stay in agriculture for the rest of my career.

2) The two of you collaborate daily in the search for new properties to fit in the firm’s portfolio. Can you please explain how that relationship works to improve the process?

[DH]: We spend every day looking at properties to ensure they fit with what our clients are looking for. What makes Molly and me a great team is that our working relationship is built on a great deal of respect for each other and for what the other person brings to the table. Our combined skill sets bring many of the pieces together that are critical in our evaluation of the assets. My focus has always been on real estate and transaction structuring, and with Molly's roots in the ag community and knowledge of water, we complement each other very well. We also have a very similar direct communication style, which helps us stay in sync on what we're seeking for our investors. Molly and I are surrounded by an outstanding farm management and operations team that is equally entrenched in the new acquisition process with us.

[MT]: I'm smiling over here. I've got to give Danielle all the kudos. I don't go out there and find the assets or the properties, nor do I make the actual deal happen—that is all in her wheelhouse. She'll find something and ask me to weigh in from a water perspective. Our teamwork continues pretty much throughout the entire process because with water diligence, there's so much to examine and learn. When Danielle and I tag team on property analysis, I think we bring a dynamic that I almost want to say is atypical to most workplaces. We work together and get it done while covering each other's backs.

[DH]: I would add to that, too, that it really comes down to the culture that we stand by in the field, which is “do the right thing, even when no one's looking.” Our intent is to buy investments for our investors that meet their expectations and long-term goals. To do that, we need to set up our farm operations team to be successful by buying high-quality assets. I'm relying on Molly to help me find the right properties with the right characteristics, and in turn, I strive to set up Molly to be successful in the long-term investment of this property as she continues to manage it into the future after we close escrow.

3) Manulife Investment Management seeks to create value through the sustainable management of natural resources. How does this, along with managing other environmental variables, such as climate change issues and soil suitability, factor into your due diligence of potential properties?

[MT]: At a very high level, I believe that our company culture and investment thesis—to buy good properties, and do the right thing even when nobody's looking—is a great guide. Our due diligence and analysis allows us to determine viability of long-term sustainable farming of that property.

When we look at the water and sustainability, we need to determine what water supplies are available, and the long term security of those supplies. The supplies may come from the district for state or federal water or there could be a riparian right to a nearby stream bed. We then ask: How much water does the district deliver? How often do the riparian streams flow? What are the flows? How many acres are subject to that riparian right? The same questions are applied to groundwater. When groundwater is sustainably managed, it’s a suitable source to aid in irrigating a farm’s assets.

[DH]: Sustainable management of resources is absolutely at the forefront of our minds when we're thinking, not only about new acquisitions, but about the ongoing management of our clients’ properties. Molly is part of a larger sustainability team within Manulife Investment Management so we have a team of subject matter experts available who can assist with things such as soil improvements, carbon credits, and wind or solar energy creation. We also have internal biological experts related to protection of endangered species or natural habitats. We employ third-party vendors to support us in environmental, water, and agronomy reviews.

When I think about ESG, to me, the most important letter in the acronym is “S” for social. When we acquire new properties, we're becoming members of the local community, working alongside existing farmers, operators, and families. We want to be the best neighbor that we can be, so we are constantly thinking about how we can positively impact those who operate in that region. We spend a great deal of due diligence time making sure we have the right health and safety and risk management policies in place. It's paramount that everyone on our farms is able to go home safely every night to their families.

4) How do you assess properties, particularly water sustainability, in a new land acquisition, as well as manage the geological, political, and regulation aspects?

[DH]: Our first step in assessing new potential properties is determining if the farm is in the areas we operate and suitable to farm the crops that we grow. And then in California, specifically, the next item we analyze is water, both from the groundwater and the surface water perspectives. I'll reach out to Molly and the farm manager who cover that region, as they have the most detailed and up-to-date knowledge on the water resources and regulation in their area. Next, we evaluate the soil quality, crop health, and environmental condition of the property.

[MT]: We call it our qualitative versus quantitative. There are many aspects that we can numerically analyze, like a water contract versus water demand for an asset. There are also politics surrounding water, given that there are so many different agencies and stakeholders in need of this resource. For example, an asset that's in Bakersfield, California, may be in a water district and also in a groundwater sustainability agency, or possibly two, depending on the boundaries of the asset. We examine the groundwater sustainability plans and review the governance of the district to ensure the regulatory bodies are also focused on the long-term sustainability of water.

[DH]: One of the things we really strive to do is hire team members who have local connections and local experience. Therefore, when we're trying to understand what's happening in that area, we likely have a team member on staff who has insight through either years of experience farming in that area or through their personal network.

Being able to learn from other people's experiences is very important, and that's also a really great thing about agriculture, as it very much feels like an open door. People and communities want to see their neighbor succeed and do well. The potential for success is not finite; there's enough to go around.

Additionally, I would say that on a transaction level, we strive to treat every counterparty that we come across with the same amount of respect—whether it’s a farmer who owns 100 acres, or a large institutional investor with thousands of acres—at the end of the day, we are one community. It's really important for us to be good neighbors, to be good stewards, to treat everyone we come across with respect.

5) How much impact has the drought had on the work that you do?

[DH]: The drought has put pressure on local operators. In California right now, we are in a low price commodity environment, coupled with higher input costs. It’s kind of a perfect storm, but we're positioned to manage through these issues.

[MT]: While the drought has complicated the available water for our assets at the water district level, the state and the federal water supplies provide an allocation each year. The drought has made water allocation a bit more difficult, and the water markets in some areas haven't quite gotten up to speed. Our company has been very involved in the Sustainable Groundwater Management Act process and in honing its sustainability efforts. While it’s a difficult moment and it's not an easy thing for us or our communities to navigate, we’ve worked really hard to position ourselves for this situation, to be sure that our assets can sustainably survive through this drought.

6) At each Women in Agribusiness Summit, our sponsors (like Manulife Investment Management) provide opportunities for college students to attend the event to gain industry knowledge and benefit from networking with professionals in the sector. What message would you give to young women just entering the world of ag, who may be trying to decide which path to choose?

[MT]: I would say to lean heavily on the network of females already in the field. There's a huge community and a vast network out there. We all want to see everyone succeed, so reach out, ask questions, and make connections. When you start making connections with people, you can optimize the fit for both your personality and your credentials. And I feel like that'll lead to the happiest career.

[DH]: I would echo that as well. I was thinking about how I got to where I am now, how I wouldn't be here if not for the support of four females. Three of them, whom I worked with in the real estate group, made the recommendation to bring me over to the ag side, and another female, who already worked on the ag team, though she didn't know me, still advocated for me to get the position. The four of them together are why the door was opened, and I had an opportunity to come work for this team that has changed my life.

So lean on the network you have or jump into a new one. I would recommend joining associations—such as the American Society of Farm Managers and Rural Appraisers—and going to conferences (like the Women in Agribusiness Summit) and local meetings and networking groups for young professionals.

The other message is, if you love ag and you're passionate about it, you should go for it! It's been a place that welcomed me with open arms even though I don't have a farming background. It’s an industry where if you're a passionate person and hardworking, your possibilities are endless. I highly encourage women to look into ag and the opportunities that exist, including roles like Molly’s and mine that may not follow the typical ag-econ or agribusiness career paths.

About Molly Thurman

Molly Thurman is water resource manager, Western United States, agriculture, for Manulife Investment Management. She is responsible for managing water assets for the firm’s managed farmland in California and the Western United States, which involves overseeing a water operations manager and directing work on current and future water budgets for each ranch under corresponding policies. In California, she participates in water market development, water purchase/sale transactions, and implements water supply strategies while seeking to ensure compliance with the state’s Sustainable Groundwater Management Act. Elsewhere in the West, Thurman ensures that the firm is proactive in water policy and that assets continue to flourish with sufficient water supplies under ever-changing policies and climate. Thurman holds a bachelor of arts degree in political science and environment from UCLA, and a master’s degree in sustainability management from Columbia University.

About Danielle Harris, CAIA, AFM

Danielle Harris is the California regional acquisition manager for Manulife Investment Management’s agriculture business, which provides investment and farm management to institutional investors in the United States, Canada, Australia, and South America. Prior to this position, Harris worked in other roles within the firm’s agriculture team, including as a transaction manager and farm operations manager, and as an analyst for Manulife’s real estate finance team. She formerly worked as an operations analyst for AgIS Capital LLC. Harris received her bachelor of science degree in business administration with a concentration in finance from Northeastern University, and an M.B.A. from Boston College. She holds the Chartered Alternative Investment Analyst (CAIA) and Accredited Farm Manager (AFM) designations.

ENDNOTES

1 Fastmarkets RISI Global Timberland Ownership and Investment Database, as of March 11, 2022. This ranking is based on total assets under management.

2 Manulife Investment Management’s agricultural investment group was ranked #2 out of the top 30 agriculture investors by AUM according to the Global AgInvesting Rankings and Trends Report 2019. You can request a copy of the report here.

This material was prepared solely for informational purposes, does not constitute a recommendation, professional advice, an offer or an invitation by or on behalf of Manulife Investment Management to any person to buy or sell any security or adopt any investment strategy, and is no indication of trading intent in any fund or account managed by Manulife Investment Management. Manulife, Manulife Investment Management, Stylized M Design, and Manulife Investment Management & Stylized M Design are trademarks of The Manufacturers Life Insurance Company and are used by it, and by its affiliates under license.