Development of Northwest vineyard properties continues


For the Capital Press

Despite the flagging economy, the California Public Employees Retirement System is sticking with its $200 million worth of vineyard properties in Oregon and Washington.

William Hill, CEO of AltaTech Viticulture, of Napa, Calif., manages those investments, plus two other $200 million vineyard properties purchased in 2007 and 2008 for Commonfund, a national university endowment fund.

Hill said no vineyard properties have been sold, except for an in-house sale of some properties from CalPERS to Commonfund.

"We don't have anything for sale," he said. "I wouldn't do it in this market anyway."

AltaTech is a vineyard investment company that manages the assets of Premier Pacific Vineyards and Meriwether Farms, companies established and held by two CalPERS funds, as well as two funds of Commonfund.

Hill said some Oregon properties are already producing income. Premier Pacific Vineyards, which also owns vineyards in California, currently owns about 4,000 acres of vineyards in all three states.

PPV bought the first vineyard acreage for CalPERS in the Eola Hills northwest of Salem in 1999. That land is now providing positive cashflow, although the entire portfolio is not, Hill said.

Hill expects to receive close to the 15 percent internal rate of return he had originally projected, in spite of 5 to 10 percent declines in property values in the past two years, according to the most recent CalPERS report.

CalPERS' Oregon vineyard properties are in the Eola Hills and Yamhill County.

The Commonfund investment currently has three properties with a combined acreage of 500 acres under development near Monmouth, Ore., and 200 acres in Washington state in the Horse Heaven Hills, Hill said.

The Washington land had been planted to potato and onion row crop circles and cherry orchards.

"Vineyards are much more profitable than orchards," Hill said.

AltaTech leases out undeveloped properties in Washington, but expects eventually to have up to 2,000 planted acres there.

Hill said costs to develop vineyard properties have gone down, as prices for commodities such as steel and plastic have declined. Fuel prices have dropped a bit and contractors are more aggressive in their bidding, he said.

Currently, CalPERS has real estate properties with a total value of $18 billion, including $7.8 billion in California real estate investments, in a total portfolio valued at about $181 billion, according to its most recent report.

Total assets of Commonfund and its subsidiary organizations were more than $26 billion. It is not required to release public reports.


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