The prospect of historically low interest rates is driving record enquiry for cash yielding real assets, according to syndicator, MyFarm Investments.
In the same week the Reserve Bank was making its historic decision to cut the OCR by a further 0.5% to a record low 1%, an $8.2million MyFarm offer to invest in two SunGold kiwifruit orchards was taken up by 60 investors within three days.
MyFarm CEO Andrew Watters says in stark contrast to many other cash yielding investments, the Bay of Plenty kiwifruit offer was expected to generate distributions 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 along with the sector's track record of innovation" says MyFarm economist Con Williams.
MyFarm recently withdrew a diversified horticultural offer, Kakariki Fund Limited from the market after raising $30 million from wholesale investors, but falling short of the minimum target of $40 million.
Andrew Watters says while he's disappointed at the outcome, it's given the company a clear mandate to continue providing wholesale investors direct investments into 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."
MyFarm is now seeking to raise $22.5million with its offer to invest in its second large scale hop garden development in the heartland for New Zealand hops - Nelson. Wairua Hop Garden Limited partnership is a 175 hectare dairy farm on the Motueka river that is to be converted to a hop garden over the next two years.
Cash distributions are expected after two and a half years building through to 14% p.a. There are also some significant tax benefits expected to be generated.
Management partner for the investment, Hop Revolution, is targeting global Craft brewers hungry for the unique tastes and aromas of NZ bred hops.
The opportunity comes at the same time as a number of institutional investors, including NZ Super secure investments in Nelson hop gardens.
"They're eager to gain exposure to New Zealand unique hops and the premiums the US craft brewers will pay for them," says Watters.