CalPERS Will Invest in Vineyards

The California Public Employees’ Retirement System will invest $100 million to develop vineyards in California, Oregon and Washington with closely held Premier Pacific Vineyards Inc., the companies said Friday.

The investment, part of CalPERS’ $13.3-billion real estate portfolio, is the largest U.S. pension fund’s first investment in agriculture.

The joint venture will acquire land, plant, harvest and sell grapes, then sell the developed parcels to wine producers within five to seven years.

CalPERS and Napa, Calif.-based Premier Pacific said they plan to invest 80% of the joint venture’s capital in California and the remainder in Washington and Oregon.

“The principals of PPV are experienced developers of vineyards with a successful history of selling to notable wine producers,” said Michael McCook, CalPERS’ senior investment officer and head of real estate investment.

CalPERS will provide 90% of the capital for the venture, with 10% from Premier Pacific. CalPERS said it expects to earn a 15% annualized return on the investment.

Premier Pacific was founded by William Hill and Richard Wollack in 1998 to develop vineyards with institutional investors. The company said it owns a 72-acre Cabernet vineyard in Napa, a 200-acre Pinot Noir vineyard in Oregon and a 100-acre parcel in Mendocino, Calif., that’s slated for the development of Merlot vineyards.