Farm syndication partnership

Farm syndication partnership offers rare ownership opportunity

New Zealanders wanting to be part of the country’s thriving dairy sector are being offered shared ownership of a Canterbury farm through an innovative new property investment partnership.

A 170 hectare dairy farm near Hawarden in North Canterbury has been conditionally purchased by farm investment company MyFarm.

The farm which is currently operating as a dairy support block is fully irrigated from a cheap and reliable water source and after development to a very high standard will be established for a price of just over $30 per kilogram of milksolids. More than 80 percent of the investment will be in land and Fonterra shares - with forecast cash returns averaging in excess of 8 percent per annum pre-tax.

The opportunity to invest in Peaks Dairy Ltd is being marketed to the public through leading real estate agency Bayleys. Investment parcels start at $250,000 and can be increased by multiples of $50,000.

Bayleys senior sales executives David Gubb and Bill Whalan expect between 15 and 25 investors to take up the opportunity.

“This is a prime opportunity for investors to own part of a commercial dairy farming operation they might not have been able to afford on their own, at a time of increasing demand for New Zealand dairy products.” Mr Gubb said.

Property syndication is increasingly popular with New Zealand investors. Bayleys alone has sold down some $66 million worth of syndicated buildings in Tauranga, Manawatu, and Auckland, featuring long term tenants such as Countdown supermarket, Repco motor supplies, Coca Cola, Billabong beachwear and a shopping mall.

“I believe this type of shared ownership of a farm such as Peaks appeals to many sectors of the investment market – from city investors looking to invest in a sector with a strong history, through to retired farmers who have sold off their own properties and have capital to invest, but still want to retain an interest in the primary production sector,” Mr Gubb said.

Peaks Dairy is structured as a private company with a manager or sharemilker, often a co-investor in the business, running the day-to-day activities. MyFarm, who currently manage 31 commercial farms milking 26,000 cows on 13,000 hectares, propose a three year asset management contract.

MyFarm director Andrew Watters said that between 1990 and 2008 MyFarm delivered an average return to investors of 17 per cent per annum, during the life of the investment.

“Since 2008 there has been a correction in the rural property market but MyFarm syndicates have come through that period with strong balance sheets and cashflows,” Mr Watters said.

Investment applications are available through Bayleys, with a close of date of December 16.

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