Growth Farms raising $100m for small rural buy and lease backs

17 June 2018

Matthew Cranston, The Australian Financial Review
17 June 2018

Farm manager Growth Farms is seeking to raise $100 million to buy rural properties across Australia and lease them back to farmers in a new investment structure that removes the volatility of drought and commodity price fluctuations.

Rural property values have been on an upward trajectory for the past five years, however there could be a dip in values reflecting weaker farming conditions such as the record low rainfall in NSW over the past few months.

The new fund known as the Australian Agricultural Lease Fund and whose cornerstone investor is Sydney-based Providence Wealth, is targeting net returns of 10 to 12 per cent including a 4.5 per cent yield from leasing the properties back to farmers.

“Investors have been searching for a way to own agricultural property without having to take on the risk of commodity prices and climate,” Growth Farms managing director David Sackett told The Australian Financial Review. “They also want something that has very little correlation to other asset classes.”

Read full article here.