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Low interest rates drive search for lucrative assets

New Zealand: Investors streaming into horticulture

Low-interest rates are driving more and more enquiries for lucrative real assets, according to rural syndicate property investor MyFarm Investments. Within three days of the Reserve Bank of NZ cutting the OCR by 0.5% to a record 1%, the company had 60 investors take up its offering of two SunGold kiwifruit orchards ($8.2 million), it says.

MyFarm chief executive Andrew Watters says in contrast to many other cash yielding investments, the Bay of Plenty kiwifruit offer was expected to generate average returns of 9% over the next five years: “Investors are seeking cash yield, they are seeking investment diversity to spread risk and they like the market-led focus of Zespri and the sector’s record of innovation.”

The company recently withdrew a diversified horticultural offer, Kakariki Fund Ltd, from the market. It was seeking $40m but raised only $30m. Watters says despite its disappointment, the company sees a clear mandate to offer investors direct investments in single real assets: “It seems investors love the touch and feel of a specific investment, be that a kiwifruit orchard, cherry orchard or hop garden.”

As reported on ruralnewsgroup.co.nz, MyFarm is now seeking to raise $22.5m for its second large scale hop garden development in Nelson. Wairua Hop Garden Ltd partnership is a 175ha dairy farm on the Motueka River due for conversion in the next two years. The company expects to distribute cash after 2.5 years, building to 14% p.a. It also expects tax benefits.


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