The Private Land & Property Fund is Booster’s solution for savers struggling with low interest rates. It aims to deliver average annual returns of 8% over a seven-year horizon. This is the fund’s first addition in Northland, adding to its portfolio of land in Marlborough, Nelson and Hawkes Bay.
“Kiwifruit is New Zealand’s most successful export crop. Our fertile soils and excellent growing conditions produce a premium crop that command high international prices. Everyday people will be able to share in this success as investors,” said Booster Chairman Paul Foley.
The Private Land & Property Portfolio is purchasing 50 hectares of land, with 20 hectares currently planted, from Seeka, New Zealand’s largest kiwifruit producer, under a sale and lease back arrangement. Seeka will continue to operate the orchard and will pay a fixed rental to the fund. Fully committed to Northland, Seeka recently bought a Kerikeri packhouse operation and built a bigger, improved facility.
The Booster purchase allows Seeka to unlock capital while continuing to operate the orchard and produce high-value fruit which will be processed through its packhouse and sold to market. The deal also allows for considerable future growth of the orchard through Booster’s development of currently unplanted land included in the sale. Booster’s initial investment is $15.5m and is expected to rise to a total of $22m with further planting of gold kiwifruit planned for next year and a potential further payment to Seeka in five years based on orchard production (of up to approximately $1 million).
Seeka recently converted the orchard to Zespri Sungold kiwifruit on the hectares sold to Booster. Its smooth-skinned, sweet SunGold variety commands premium prices in export and domestic markets, particularly in Asia. Kiwifruit marketer Zespri returned $1.8 billion to New Zealand kiwifruit growers for their 2018 crop and plans to grow global sales to $4.5 billion by 2025.
"Diversification across regions and crops reduces the fund’s exposure to climate, pests and other risks. The fund provides another choice for New Zealanders who need a wide range of investment options to support their individual financial goals, whatever their stage of life,” says Foley.
Settlement of the transaction is expected to occur on 30 September 2019.