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46 W i n e s & V i n e s s e p t e m b e r 2 0 1 4 L ong the public face of Silverado Wine Growers and Silverado premium proper- ties, David Freed is now chairman emeri- tus of the companies, two of the most successful vineyard investment firms in the business. With more than 10,000 acres of vineyards in cali- fornia, the two companies sell grapes to more than 100 wineries. Freed hasn't talked much about the business, however. "Institutions prefer low visibility," he admitted. As Freed transitions out of management, however, Wines & Vines interviewed him to find out more about the company. He remained reticent about numbers but explained why the firms have been so successful when a number of other highly visible vineyard investment firms failed. The history This year is the 32nd anniversary of the found- ing of Ucc Vineyards Group, Freed's original wine venture. It's also the 22nd year since Freed helped found the annual Wine Industry Financial Symposium to improve the dialogue between growers, wineries and the financial community. In 2012 TIAA-cReF, a financial services firm managing $564 billion in assets, acquired the portfolios of Silverado Wine Growers and Silverado premium properties, which it now operates as Silverado Investment Management co. Mark couchman, the long-time president of Silverado Wine Growers and Silverado pre- mium properties, is president. The industry hardly noticed when TIAA ac- quired Silverado's portfolio, but in truth, Freed said that it was just one in a progression of investors. He had first invested in a vineyard as Ucc Vineyard Group, acquiring 50% in a carneros AVA-based pine Ridge vineyard, which the company held for 27 years. Ucc later transi- tioned into Silverado Wine Growers. Freed, who was practicing corporate and tax law in San Francisco, calif., formed Silverado premium properties for institutional investors with couchman, a property-investment man- ager for prudential, in 1998. "Silverado pre- mium properties was always dominated by large investors," Freed said. Silverado Wine Growers was the investment vehicle for smaller investors. Silverado premium properties originally had two major investors: principals of Texas pacific Group (now TpG) and colony capital, a firm from Los Angeles, calif. over time, John Han- cock and Harvard University invested, then TIAA-cReF invested in the company and eventually bought out the other investors. TIAA-cReF completed its acquisitions of Silverado premium properties and Silverado Wine Growers in 2012, and Mark couchman continues to manage the portfolio. Freed is no longer involved in the management. TIAA-cReF had its origins in a fund An- drew carnegie established as a retirement fund for college professors. Freed says that it con- trols a high percentage of pension funds for professors in the United States. "It's very high principled. TIAA-cReF, the large teachers' pension fund, has been investing in agriculture since 2007. It made its first Silverado vineyard investment in December 2007 via a portfolio investment. "It's a good match for the 25- to 30-year life of a typical vineyard since professors typically retire after 25 to 30 years," Freed noted. He added that vineyards rise in value over time unrelated to stocks or other real estate cycles. TIAA-cReF acquired most of Westchester, an agricultural management company, in 2010. As of Dec. 31, 2013, TIAA-cReF controls ap- proximately 28,000 acres of california vine- yards through its Westchester and Silverado entities. Vineyard values Freed, who is 71, is now chairman emeritus and acts primarily as a resource for the com- pany. "Mark (couchman) has been president since 1998," Freed said. "He did the hard work, and the wine industry knows he runs things." "We are in the business of generating income," Freed added. "couchman knows the institu- tional investors. They need a return on assets. We need to generate more and more income." He contrasted Silverado's strategy with that of premier pacific Vineyards, which largely David Freed Reflects on Silverado's Success the retiring chairman of two California vineyard investment firms reviews their strategies By Paul Franson Highlights • in a progression of investors, $564 billion tiaa-CreF now owns silverado Wine Growers and silverado premium properties. • as David Freed transitions out of management, he speaks with Wines & Vines about how the Napa-based companies grew. • Freed cites a focus on generating income as a critical element of their success. david Freed is the chairman emeritus of two napa Valley-based firms that own 10,000 acres of vineyards and sell to 100 wineries. Wine industry Finance 2014 F I N A N C E