MyFarm is offering a rural commercial property investment in the Taranaki poultry industry consisting of $16.7 million raised from wholesale investors and bank finance of $10.24m.
Called the Bristol Properties offer on Bristol Rd at Inglewood, this is the third property investment by MyFarm with poultry industry leader Tegel Foods as the tenant.
The initial lease period is 14 years out to 2036 with three rights of renewal by the tenant out to 29 years, or 2051.
The rental value is adjusted each year by the change in the consumer price index capped at 5%.
The starting rental value and the purchase price of $25.5m give a forecast return on investment of 7.2% a year and the forecasts including CPI could push annual returns into the 8-9% range.
The investment is offered in $1 units and a minimum amount of $50,000 per investor.
The units will be quoted and traded on the Syndex Exchange.
The property has 12 modern chicken sheds totalling 28,800 sq m, detached amenities and two modern residential houses on a total of 16.27ha.
The sheds were built in three groups of four and stage one of eight sheds was built in 2015-16 and stages two in 2016-17.
Tegel was heavily involved in the design and construction to ensure longevity and performance.
Shed technology is used to automatically adjust feed ratios, temperature and humidity, providing a wealth of data from production.
The surrounding area has many breeder and hatchery farms operated by Tegel from which birds are sourced.
This property is one of the few growing farms operated by Tegel, which also operates a processing and distribution facility at nearby Bell Block.
The Bristol Road property is a critical part in the total supply chain, the MyFarm information memorandum says.
It said the Taranaki region has been a focus for expansion for Tegel Foods in the past decade, with a 40% growth in poultry units for what is now a private company owned by Bounty Fresh Foods of the Philippines.
On purchase, Bounty said it wanted to use its own sales and distribution channels to sell Tegel products in Philippines and Indonesia.
Tegel has a vertically integrated model that starts with quarantine breeding units through to processing, marketing, sales and distribution of poultry products throughout New Zealand and to selected export markets.
Tegel and its main rival Inghams Enterprises, an Australian listed company with Inghams family origin, control 90% of the NZ poultry production market, excluding eggs.
Three smaller family-owned companies round out the NZ poultry industry, Brinks in South Auckland, Turks in Horowhenua, and Bostock in Hawke’s Bay.
Chicken consumption in NZ is reported to be 43kg per person annually, equivalent to 20 chickens.
Bristol Rd can house up to 480,000 birds at one time and has seven population replacements a year.
Tegel sources chickens from 100 farms nationwide, originating from 38 breeders and three hatcheries, one in each of three regions in which the company operates.
It also has three processing plants, in Auckland, New Plymouth and Christchurch.