Syndication uptake signals investor demand
The rapid uptake of Silverfin Capital’s largest-ever property syndication scheme shows there is still plenty of investor demand for blueprints with good projected returns, says the company’s CEO.
The Inghams portfolio scheme, marketed by Colliers International’s syndications team, settled last week after attracting more than a thousand inquiries from investors.
The high level of investor demand resulted in all 932 units of $50,000 each being snapped up three weeks before closing.
Established by New Zealand company Silverfin Capital Ltd, the scheme is underpinned by a Waikato property portfolio on long-term lease to Australasia’s leading poultry producer, Inghams.
Silverfin CEO Miles Brown says it is the company’s fourth scheme in a row to be oversubscribed before closing.
“We were confident the demand was there, but we’ve been surprised by the very high level of investor interest.
“We’re particularly pleased to have welcomed more than 100 new investors into the Silverfin family.
“The unprecedented level of interest shows there’s still plenty of appetite in the market for well-structured schemes with good projected returns, underpinned by solid property fundamentals.”
The Inghams portfolio scheme is a long-term managed investment in six properties, comprising four breeder farms, a hatchery and a processing plan, which make up the 186ha Inghams portfolio.
The facilities in and around Matamata — located to support Inghams’ poultry supply chain — are on 20-year leases.
Investors are projected to receive a pre-tax cash return of 8.25 per cent per annum to March 31, 2024. Silverfin intends to pay monthly cash distributions to investors.
The scheme is registered as a portfolio investment entity (PIE) scheme, which falls under special tax rules. As a result, investors will be paid returns at their prescribed investor rate (PIR), rather than their personal income tax rate. The Inghams portfolio was bought for $86m.
Brown says a number of external factors gave the scheme a boost in the market. “Recent interest rate cuts have resulted in more and more investors seeking high-yielding alternatives to term deposits with banks.
“In addition, the rejection of a capital gains tax has helped to boost investor confidence in all property asset classes, including syndication schemes.”
Charlie Oscroft, Colliers International’s syndications director, says the scheme’s fundamentals were a decisive factor for many investors.
“The Inghams portfolio is underpinned by the success of the poultry industry, which continues to see strong growth.
“Chicken is New Zealand’s most popular meat, with consumption more than doubling over the last three decades, to 37.5kg per person every year — that’s 20 chickens each, annually.
“To meet this enormous demand, the country has 180 poultry farms employing 3500 people. The industry’s growth story really resonated with investors, which was reflected in uptake of the scheme.”
Associate director Kris Ongley says there were some 90 inquiries over the first weekend of the campaign alone.
“We also had unprecedented levels of interest. We expect this to carry over to future syndication offers, given the ongoing low interest rate environment.”
Founded in 2016, Silverfin has steadily become a leading player in the New Zealand property syndication and management market. It has about $388m under management.