Analyzing investment opportunities in agricultural real estate
Apollo Global Management is a high-growth alternative asset management company headquartered in New York City. In fall 2021, the company engaged students from MIT Sloan’s Proseminar in Corporate Finance/Investment Banking to develop a white paper outlining the opportunities for investment in agricultural real estate.
Three MIT Sloan MBA students—Jacob Alchek, Connor Kozin, and Eric Wainman—teamed up with Sloan Fellows MBA student Rajan Aggarwal to take on this project, bringing together years of professional experience in real estate, investment, and finance.
The students began by providing Apollo with an overview of the agriculture sector, including information on the pros and cons of different kinds of crops; the most productive geographies for agriculture; and investment statistics, including average returns, in the sector. “One of the biggest challenges we faced was obtaining high-quality and reliable information on this non-traditional and underinvested asset class,” Kozin says.
“Most owners of agricultural real estate are local individuals who interact almost solely within their tight-knit communities and are skeptical of outside investors,” Wainman adds.
To bridge this knowledge gap, the team conducted a variety of interviews with market participants, built extensive financial models to project optimal crop portfolios, and analyzed prospective acquisitions of farm land and agricultural companies. The team used a combination of theoretical and practical data analytics and valuation frameworks to assess expected performance at both the asset and fund levels.
In the end, the students identified key opportunities and risks for sector investment, which they presented to Apollo. “Our most significant takeaway from this project was learning how to put together a thematic investment strategy from the idea generation phase through sourcing specific opportunities,” Alchek says. “More specifically, it was a great opportunity to test our abilities to develop forward-thinking and contrarian investment strategies.”
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Bryan Rodriguez, a principal at Apollo Global Management, says the students’ white paper was very impactful.
The student team made a complex investment idea easily digestible by way of thorough research, detailed analysis, and clear explanations. The work presented a compelling thesis for the asset class, including specific subsectors where investors could create additional value.
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