GMO Farm Land Optimization (FLO) Fund

As of May 2012

General Information
Launch Date: May 21, 2012

Term: 10 year initial, with automatic five-year extension

Target Commitments: $200 to $400 Million

Fund Closing Date: October 2012

Target Return: Annualized net real returns of 5-7%

Overview

The Fund seeks to deliver strong risk-adjusted returns from a globally diversified portfolio of agricultural properties utilizing
a value-driven approach that optimizes the use of land and related assets. The Fund will invest in land that is appropriate for
the production of a combination of crops (row and permanent), livestock and timber.
Methodology

The Fund will be managed by GMO Renewable Resources, LLC (GMO RR). The Fund will seek to acquire attractively
priced farmland where productivity can be improved and the returns enhanced through the addition of capital, optimizing
the mix of activities on the farm and achieving scale. Examples of improvements include better nutrient application through
precision agriculture, laser leveling, irrigation, drainage, infrastructure additions and the adoption of appropriate technologies
such as improved genetics. The Fund will target investments in regions with relatively high productivity-to-land value ratios,
where water is not a constraint and where the sustainable use of water can be improved in order to maximize productivity
and returns.
The Fund will incorporate land optimization strategies where land will be converted from one use to another to maximize
productivity, future cash flows and appreciation. In some regions, timberland may be reconverted to its former use as
farmland if an arbitrage opportunity exists between the cost of purchasing and converting timberland and the cost of
purchasing farmland. In other regions, farmland may be converted to timber plantations if higher returns can be realized
through greenfield projects.
As with GMO RRs timber investments, the Fund will focus on properties in lower risk geographies where good title, highquality management, and adequate infrastructure are available. Properties may be leased to local farmers for a stable cash
rent, directly operated where the Fund takes yield and price risk, or some combination of approaches where both the Fund
and the operator share in upside and downside potential. GMO RR investment professionals and third-party farm/forest
managers will provide oversight of property-level operations.
Portfolio Construction

To achieve its objective, the Fund will invest opportunistically on a global basis. The portfolio will include a mix of livestock
and crops, with some timberland. It will be diversified across investment regions where commercial agriculture is well
developed and where the Fund can draw on GMO RRs resources, experience and track record. A hypothetical portfolio is
shown in the chart below. While the Fund is expected to invest primarily in the countries noted in the hypothetical portfolio,
it may invest in other jurisdictions, including Brazil, Chile, Costa Rica, and Panama.
Model Portfolio Allocation*
3%

U.S. Row Crop

2%

U.S. Permanent Crop

12%

25%

U.S. Timber
NZ Grazing/Dairy

5%

NZ Timber
AU Row Crop

5%
5%

AU Grazing
AU Timber

3%

10%

AU Permanent Crop
UY Row Crop

5%
3%

23%

UY Grazing
UY Timber

* The hypothetical portfolio above reflects a potential portfolio based on current market conditions and the managers assumptions regarding future market conditions.
The information presented assumes a portfolio size of $300 million. The hypothetical portfolio allocations are subject to change at any time based on market and other
conditions. There is no guarantee or assurance that FLO Funds actual portfolio will be allocated in the manner described above, and actual portfolio allocations may
differ substantially from the hypothetical allocations presented above.
Note: The information presented herein is provided for discussion and information purposes only. Please see Important Information on reverse.
GMO 2012
Updated 5/12

GMO Farm Land Optimization (FLO) Fund

As of May 2012

Risks

Risks associated with an investment in the Fund include: Acquisition (market) risk, Price and Yield Risk for directly-operated
properties, Counterparty Risk for leased properties and Environmental Risk. These risks will be managed on a property by
property basis and will be mitigated through the Funds diversification. Detailed information regarding risks associated with
an investment in the Fund is included in the Funds Confidential Offering Memorandum.
Investment Process
Targeted Returns
Model Portfolio
(Diversification Targets by Geography and Sector)
Modeling

Deal Sourcing

Property Pipeline

Investment Committee Review

Acquisition

Property Management
Decision (Lease/Operate)

GMO Farm Land

Optimization Fund
Investments will be sourced and screened in accordance with a set of criteria that reflect the Funds targeted returns and
diversification guidelines. GMO RR maintains an active pipeline of investment opportunities, developed through our
network of rural property management professionals, brokers and service providers in each geographic region. Potential
acquisitions are modeled through discounted cash flow analysis to project investment returns and establish a property value.
Assumptions are validated with property inspections and research. Sensitivity analysis is performed to analyze the relevant
pricing, cost and productivity parameters under a variety of economic and risk scenarios. A written analysis of the
investment opportunity, including investment models and any due diligence results, is presented to the GMO RR investment
committee for review and approval. The timing of the investment committee approval and the overall due diligence process
depends on the nature of the particular transaction. Once a purchase price is agreed to and the investment committee has
approved the acquisition, final due diligence is completed, and the Fund acquires the property.

Important Disclosure: The information presented herein is provided for discussion and information purposes only. No offering of interests in GMO Farm Land
Optimization Fund (Fund) or any other fund managed by GMO Renewable Resources, LLC (GMO RR) is made or implied as a result of the circulation hereof, and
under no circumstances is this material to be used or considered as an offer to sell or a solicitation of an offer to buy, any security. Any such offering may be made only by
the Funds Confidential Memorandum (the Memorandum) and the definitive provisions provided for in the Limited Partnership Agreement, Subscription Agreement
and/or other operative documents of the Fund. This material is not intended to be relied upon as the basis for an investment decision, and this material is not, and should
not be assumed to be, complete. In making an investment decision, prospective investors should conduct their own investigation and analysis of the data and descriptions
and must rely on their own examination of the investment opportunity, including the merits and risks involved. The information presented herein is proprietary and
confidential, may contain commercial or financial information, trade secrets and/or intellectual property of GMO RR and/or its affiliates, and may not be reproduced or
distributed without the express written consent of GMO RR.

GMO 2012
Updated 5/12