Investors attracted to Farm syndicates

Investors attracted to Farm syndicates

Investors have put $43million into MyFarm dairy farm syndicates in 2009.

In the past year the farm investment company has settled 45 investors into six properties in New Zealand and two in Australia with a net asset value of approximately $65.7million.

MyFarm Director, Andrew Watters says there has been strong and growing demand over the past six months from investors attracted to the yield and security of a tangible dairy farm investment.

“We are seeing a high level of interest from non-farmer investors and farmers from other sectors driven by favourable farm prices and stabilising payouts.

“We are able to source high quality properties for up to 25% less (for stock and land) than during the dairy boom in 2008. This combination of lower asset prices and interest rates reduced debt servicing costs by almost 50% or 77 cents/kg MS and appealed to many investors.”

Another factor in the growing demand has been the 95% increase in Fonterra’s payout to $6.05/kg MS. MyFarm syndicates are forecast to produce cash yields of 5-7% per annum, based on payouts significantly lower than the current $6.05/kgMS Fonterra milk price plus value return forecast.

The eight farm syndicates established in 2009, included four in southland and two in Canterbury, which are both growth areas for dairy investment.

“Southland continues to attract investment because of the availability of high quality, reasonably priced land and Canterbury properties with water can deliver very good cash returns.”

Andrew Watters says investors are also showing keen interest in sheep and beef investment, prompting MyFarm’s newest syndicate investment opportunity -Kaiangaroa station near Taihape for establishment of a heifer grazing and lamb finishing syndicate.

ENDS

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