NZ Rural Land to pay $10.4m for farm
New Zealand Rural Land Company has agreed to buy its first dairy farm in Southland since listing.
The company raised $75 million in an initial public offering and listed on the sharemarket in December, which together with debt gave it about $100m to buy rural land. At the time, the company said it was eyeing 21 dairy farms in the South Island, covering 9239 hectares.
On Monday it announced its first planned purchase, a 456-hectare dairy farm in Mokoreta, Southland, for $10.4m. It has agreed to lease the farm to Southland dairy farmer Fortuna Group for 10 years for $515,667 a year, representing a 4.97 per cent lease yield after transaction costs.
NZ Rural Land Company said it was working on several larger dairy farm purchases in the South Island and expects to complete talks in coming weeks with settlement expected before June 1. That’s faster than it previously anticipated and the company said it was in talks with debt funders to help cover the purchases.
The Mokoreta purchase is conditional on a successful ‘‘drop test’’ to test the integrity of the effluent pond on the farm, which is due to be confirmed on March 26, with settlement expected on June 1.
The company offers investors a chance to invest in rural land, which it says is one of the country’s largest and most important asset classes. While initially focusing on dairy farms, it expects to expand to horticulture, viticulture, forestry and sheep and beef farms over time.
Shares in New Zealand Rural Land Company last traded on Monday at $1.14, down 8.8 per cent from their issue price of $1.25.