Fund Review: Booster Private Land and Property Fund
If you can’t afford a vineyard or an orchard, you can still invest in one. Amy Hamilton Chadwick reviews this agricultural and horticultural fund.
9 March 2022
If you like the idea of sitting back and celebrating with a glass of Marlborough sav blanc, knowing that you had a share in the grapes that produced it, the Booster Private Land and Property Fund (PLPF) might be for you.
What does PLPF invest in?
The fund buys freehold New Zealand agricultural land that generates an income from either selling its crops or leasing the land.
The crops range from grapes to kiwifruit to hops to citrus, and the fund owns property in Northland, Hawke’s Bay, Nelson and Marlborough.
The aim of the fund is to offer Kiwis an accessible, diverse way to invest in our agriculture, viticulture and horticultural sectors.
To buy, say, a gold kiwifruit orchard, you’d need to spend somewhere in the vicinity of NZ$$1.5-1.75 million a hectare.
PLPF lets you have a fraction of the ownership, plus more diversity, at a much more appealing starting price.
The minimum investment directly through Booster is NZ$1000, or you can buy shares in the fund on the New Zealand Stock Exchange (NZX), which on October 30 were trading for around NZ$1.20 each.
Some examples of properties owned by the fund include:
- Vineyards in Marlborough which supply grapes to Awatere River Wines and Sileni Estates.
- Vineyards in Nelson leased to Waimea Estates.
- Kiwifruit orchards in Kerikeri leased to Seeka Limited.
- Hop-producing properties in Nelson which supply to New Zealand Hops Limited.
“Our investors do enjoy buying a bottle of wine that probably contains our grapes, or slicing up a Yen Ben lemon for their G and T which came from one of our orchards,” says Duncan Wylie, General Manager, Strategic Development, for Booster.
“Wine is such a New Zealand export success story, why wouldn’t you want to participate? But for me, I’m most excited about the hop industry – it’s a really interesting crop with solid returns, plus the ability to quickly adapt varietal mix to changing consumer demand, without losing years of production.
“New Zealand hops are the cream of the crop when it comes to premium hops, and within two years we expect to have over 100 hectares of mature crops. It’s really quite exciting.”
What are the risks?
There is one unavoidable risk when you invest in any agricultural business or product: Mother Nature.
Although the diverse locations within the fund’s investments help reduce risk, your investment could still be hit by adverse weather, a fall in global demand, low yields, diseases or pests.
Other risks also apply, so you should read the fund’s Product Disclosure Statement found on its website for a comprehensive analysis.
What are the fees?
The annual fund fees are estimated at 1.19 per cent, with some potential variation in property operating expenses.
If you buy into PLPF directly, withdrawal fees apply if you take out more than NZ$50,000 in a single year.
If you buy PLPF on the stock exchange, there are no withdrawal fees; however, you will need to pay any fees that apply through your share trading platform or broker.
What are the returns likely to be?
The fund aims for returns of 6.5 per cent per annum (pre-tax), although you should expect results to fluctuate.
Wylie says the fund has returned 10.6 per cent per annum (pre-tax) since inception. He believes the size of the fund will grow by at least 50 per cent this year, which will allow for more diversification of crops and locations.
“The fund is at a fraction of its potential; we see this as a half-billion-dollar fund in the future – we’re short of investable properties rather than funds.
“That’s because we don’t feel the need to invest in assets that are only just good enough. We want sustainable commercial enterprises that have a light environmental touch on the land.”
Who does this fund suit?
This fund will be ideal for investors who want some exposure to New Zealand’s commercial agricultural sectors, as part of a wider balanced portfolio.
It’s important to understand all the risks, so take your time to read all the information available about the fund before you invest.
You’ll also need to weigh up the pros and cons of direct investment versus buying on the NZX. Because agriculture is a long-term business, this is best approached as a long-term investment, particularly if your funds are subject to withdrawal fees.
“I’ve worked in the investment industry for 40 years and this is most fun job I’ve ever had,” Wylie says.
“When I visit one of our sites and look out at 100-plus hectares of vineyards, I think, ‘This is something is that has enduring value and there’s just no substitute for owning a piece of it’.”
Capitalisation: Around NZ$87 million
Minimum investment: NZ$1000, or via NZX
Fund fees: Around 1.19 per cent a year
Return: Forecast at 6.5 per cent a year
Share price (30 October 2021): NZ$1.18
Call 0800 40 40 50 for investment documents or visit www.booster.co.nz
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