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Agricultural Leaseback – Immediate, secured 8% net income
You won't find this anywhere on the web, at least not until the word gets out!
8% net income you say? Yes we do actually. When your bank is only paying 0.5% this sounds tempting right?
This is a very special niche opportunity that we have sourced in partnership with one of the most respected agricultural finance solutions partners in the UK. The deal is this:
Many farmers, although extremely asset rich, are in fact cashflow poor. Regardless of the accepted perception, farmers get an extremely rough deal when it comes to cashflow. Supermarkets are constantly squeezing margins (think what happens to farmers when supermarkets offer 3 for 2s...), banks are cutting funding lines, and on top of this, the EU, with various new directives, now require farmers to upgrade in numerous ways, at great cost. However, there is a solution, and it is win-win for farmer and investor:
Typically a sound farmer can increase productivity and profitability with short-term funding. This can be accomplished even in this market by agreeing a leaseback deal with an investor. Don't worry this will be fully managed and is a hands-off investment. The investor buys a percentage of his farmed land but agrees to lease to back immediately to the farmer. The good news is that typically the amount required is no more than 60-70% of the current market valuation so the investor begins with a strong equity position. The farmer will pay around 8% net per annum for an agreed period (2,5, or 10 years on average) and agrees to buy back at the same percentage of valuation on the date of sale. Therefore a capital gain opportunity exists for the investor. The funds used to purchase will also typically pay off a high interest mortgage and provide the farmer with a cheaper financing option, thereby increasing his profitability.
The real beauty of good quality UK farmed land is that its value through tough times is incredibly robust. Values hardly dropped through Foot and Mouth, BSE, and have barely dropped in the last 2 years. In fact in some spots they continue to rise because:
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Farmed land has intrinsic value – we have not found a way to produce food that does not involve land, which means an income can be derived, unlike other hard assets such as gold and wine.
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Farmed land is increasingly in demand from non-food avenues
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There is a chronic shortage of farmland on the market at any one time. Due to increases in wealth, farmers have moved from being tenants to owners and this has seen a 90% drop in available for sale supply to only 100,000 acre per annum since records began in 1945.
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Neighbouring farmers view closeby farmed land for sale as a once in a lifetime opportunity. Due to their productivity business model, farms need to expand. As a result, farmed land for sale 99% of the time goes on the day and for at least reserve price.
Couple this with the strong equity position an investor takes (a minimum of 30%) and the proposition is alluring. UK farmed land, since records began in 1945, have not dropped anywhere near 30%, and with ease of liquidation, it is unlikely to pose problems exiting from position.
Further evidence on all of the above is provided in our consultations. Should you wish to discuss this exciting new concept, please register here...., or email us at enquires@discoverandinvest.com