2020 was an extraordinary year in which NZ has stood up to, and stood out against, the multiple challenges of COVID-19. The food and beverage sector performed well with the men and women on orchards and farms, in packhouses and processing facilities, selling and managing logistics, all performing to extraordinary levels.
A result of COVID has been disrupted financial markets - interest rates have plummeted whilst share markets have boomed. The consequence of both has been falling yields for income seeking investors. In this environment MyFarm had a record year executing $185 million of investment across a range of areas in New Zealand's primary sectors. This included seven kiwifruit orchards, two vineyards, three rural commercial properties, a Rockit apple orchard development and various syndicate extensions or final capital raises. The support from investors in 2020 was unprecedented with more than 800 investment transactions made and repeat investment (parties investing for their second time or more) ranging from 40% to 77%. MyFarm's average investor now holds multiple investments with us, often diversified across different crops with varying return profiles and risk factors.
We measure MyFarm syndicate performance using the international GIPS measure; we look forward to bringing you our 2020 results in the first quarter of 2021.
Although it's early in the New Year, the conversations our team is having with investors suggests strong demand again in 2021 for high yielding syndicate investments. Even with some upward pressure on property prices, MyFarm aims to generate steady state cash returns in the range of 6.5% to 7.5% p.a. from developed kiwifruit, vineyard, and rural commercial properties. In some sectors creating our own high performing assets through development will be more profitable. In these cases, we are carefully selecting properties and sectors that can generate double digit cash returns once property developments are complete and crops fully mature.
As we look to the first quarter of 2021, we have a current offer in Kintyre, a large scale Marlborough vineyard with a long term lease to proven MyFarm partner, Misty Cove. The property has been well bought and has the potential to generate returns above the 6.75 – 7% p.a. return forecast. We offered this opportunity in the week prior to Christmas and despite the inconvenient timing have raised more than half the funds required. We expect the remainder of units to sell prior to the offer close of Wednesday 20 January – you can see more details about that offer document here.
Following the closure of Kintyre, we expect to offer our second Manuka investment opportunity with the purchase of a hill country property in the lower North Island. Manuka farming is a personal favourite of mine; we forecast it can generate excellent returns starting at well above bank deposit rates, growing to double digit forecast returns. High UMF manuka honey is in high demand, recent changes in Manuka honey standards have helped manage the quality of supply and we achieve a whole range of environmental benefits such as carbon sequestration, erosion control and huge gains in the biodiversity of fauna and flora.
In later February we expect to offer an exciting apple orchard development opportunity based on a high performing club apple variety in conjunction with one of NZ's major produce companies. Then as we move into March, we expect to promote a mix of SunGold kiwifruit development and existing orchard investment opportunities.
Making the right investment decisions is clearly very important. Although our team has no place in providing advice on an investor's portfolio, we are well positioned to answer questions about the sectors and properties that we are promoting.
Please don't hesitate to send us an email or give us a call.
P: 029 440 6605