Growth Farms Australian Agricultural Lease Fund
Growth Farms Australia has launched the Australian Agricultural Lease Fund, an investment trust that will buy agricultural land and water rights and lease them to third-party farming businesses.
Growth Farms Australia’s managing director, David Sackett, says investing in a farm leasing fund is similar to investing in a commercial property fund, where investors receive an income based on the rental yield and are exposed to the change in the capital value of the property, not the value of the business using the property.
For the farmers, the leasing model offers them the opportunity to expand without having to purchase more land outright.
The fund is a closed-end trust and is open to wholesale investors, with a minimum investment size of $100,000. The target total annual return (internal rate of return or IRR) for the fund is 10-12% post fees, with a target annual distribution of 3.5 – 4%.
"We are just seeing the emergence of agriculture as a serious opportunity for investors.": Q&A with Growth Farms Australia's David Sackett
- What made you decide to launch a fund of this nature?
We have, for some years, believed that there is a need to provide a way for investors to get exposure to agriculture without it being totally tax driven, and without wearing all the ups and downs associated with the weather, prices, currency etc. We saw buying farms, and then leasing them to existing good farming businesses as the solution. Investors get the exposure to a different asset class, which has a very low correlation with other investment classes, while receiving low-risk rental income and land appreciation over time.
- Did you see the investment opportunity first, or the demand amongst primary producers or both?
From my previous career as an agricultural consultant, we know there has always been strong demand from existing farmers to expand by leasing. It makes great sense in that they require less capital for expansion. The opportunity to develop the Australian Agricultural Lease Fund came out of a meeting with Providence Wealth a few years ago when we had a discussion about how to provide low risk agricultural exposure for their clients. We then went on to develop the concept into the fund.
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For more information on how to invest in the Australian Agricultural Lease Fund, contact:
Tel +(61) 419 164 273