Friday, March 29, 2024

Investors seek inflation-proof assets

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Rural investments are lining up well against urban opportunities.
Rural investments are lining up well against urban opportunities, MyFarm head of investment Con Williams says. File photo
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Investors in rural syndicates are placing more emphasis on inflation resilience and the potential of their investment to deliver if interest rates rise, MyFarm head of investment Con Williams says.

MyFarm called a nationwide series of winter gatherings of its investors and drew more than 250 attendees, from whom Williams gathered feedback on what investors are seeking in the current economic climate.

They are still keen on productive, land-based assets delivering a steady income in uncertain times, investments with strong fundamentals and some tax efficiencies.

Over the past three months MyFarm has signed up $47 million worth of syndicate units, supplemented with $24m of borrowing, to purchase $71m of assets.

Williams used the recent Bristol Properties poultry production facility in Taranaki as an example of investors’ needs being met.

“It is in a critical supply chain infrastructure with rentals adjusted by the consumer price index to deliver fixed income growth,” he said.

“The company that is leasing your property has a strong market position in food production with good operating margins and buffers against rising costs.”

MyFarm investments carrying 30% to 40% debt will be more resilient than more heavily indebted businesses if interest rates rise.

The budgets for its propositions include 5.5% to 6% interest rates, and actual rates charged are currently lower but expected to rise.

Williams said rural investments are lining up well against urban opportunities, offering real assets in primary industries with inflation resilience in contrast to falling property values.

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