Macquarie goes back to the land
Macquarie has launched a new property fund that will invest in the agricultural sector. However, the fund manager will be buying farms, land and related agricultural buildings and leaving the original operators as tenants.
Macquarie Property Investment Banking divisional director Christopher Andrews said the new fund was not an agribusiness investment scheme, but a property fund “where we will be the landlord and the operators of the farm will be the tenants,” he said.
”It is no different to any other property fund as there will be leases to the tenants of the farms.”
The Macquarie Diversified Rural Property Fund has been launched with an option on its first investment, a portfolio of cotton farms in the Moree area of New South Wales.
Andrews said the fund was looking for good farm operators with proven operations that can provide capital growth for investors.
“We are looking at investments beyond farms, such as buildings operating as processing facilities, but they would have to deliver consistent returns,” he said.
“With land, we are looking at the value but also the potential to value add.”
The fund is interested in water entitlements especially in conjunction with land, Andrews said.
The geographical spread of properties will be nationwide, but focused on areas with good rainfall. This will also include New Zealand properties.
Types of crops are not so important, he said, as long as it is a well-run agribusiness operation.
“We will take a broad brush approach to investing in properties, but generally we are looking for operations of $30 million or more,” Andrews said.
“However, we would go below that figure if it was an exceptional property.”
The fund at present is wholesale with a minimum investment of $500,000. It is open to significant private investors who meet the minimum investment criteria.
The initial inflows will be used to purchase property over a three-year period.
“We will draw down on the allocated funds as we need them over that period so there is not large sums of cash sitting in the fund,” he said.
“But we will only be raising what we can realistically invest.”
Andrews said returns are expected to be about 10 per cent, in line with traditional property funds.
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