Inghams Portfolio Scheme offers a projected 8.25 per cent pre-tax cash return
A managed investment scheme underpinned by a substantial Waikato property portfolio, on a long-term lease to Australasia’s leading poultry producer, offers investors a chance to leverage the success of this growing industry.
The Inghams Portfolio Scheme comprises of a portfolio of six properties in and around Matamata that are strategically located to support Inghams’ highly successful, fully integrated, poultry supply chain.
The facilities include four breeder farms, a hatchery and a processing plant with a combined land area of 186ha, including a significant portion of vacant land to allow for future expansion.
All six properties are on 25-year, ‘triple net’, leases to Inghams Enterprises (NZ) Pty Limited (Inghams), which is a wholly owned subsidiary of Australian stock exchange listed company Inghams Group Limited (ASX:ING).
The lease to Inghams has 20 years remaining, plus five rights of renewal of 10 years each.
New Zealand-based syndicator and property manager, Silverfin Capital Limited, is offering investors the chance to acquire units in a managed investment scheme that is structured as a long-term investment in all six properties.
Silverfin has exclusively appointed Colliers International to market units in the Inghams Portfolio Scheme, which comprises 932 investment parcels of $50,000 each.
Investors are projected to receive a pre-tax cash return 8.25 per cent per annum to 31 March 2024. Silverfin intends to pay cash distributions to investors on a monthly basis.
Colliers International Syndications Director Charlie Oscroft, who is marketing units in the scheme with colleague Kris Ongley, says it is chance for investors to capitalise on the huge popularity of poultry.
“Chicken is New Zealand’s most popular meat, accounting for 52 per cent of all the meat consumed in the country.
“New Zealanders eat about 37.5kg of chicken per person every year – that’s 20 chickens each, annually. To meet growing demand, the poultry industry has 180 farms around the country that employ 3,500 people.
“The Inghams Portfolio Scheme offers a chance for investors to acquire an interest in six properties that play a key role in Inghams’ poultry supply chain in New Zealand.
“The properties have very strong investment fundamentals, including a long lease, superb tenant covenant and strategic Golden Triangle locations.
“Investors seldom get the opportunity to invest in properties of this calibre, let alone six properties at an affordable price point. The Inghams Portfolio Scheme represents just such an opportunity.”
Oscroft says all six properties are strategically located within a 60km radius of each other, which is a key feature of the portfolio. The properties are also located within close proximity to a large number of contract broiler farms as well as to Port of Tauranga, which is their main source of feed.
The combined net lettable area of the six properties is a substantial 90,600sq m.
The four breeder farms are located at 111 Pohlen Road, 207 Mowbray Road and 25 Okauia Springs Road in Matamata and 903 Leslie Road, Tapapa. They have a combined site area of 115.2ha.
The farms are the first step in Inghams’ Waikato supply chain network, producing eggs that are delivered to the hatchery.
The hatchery is located on an 8.4ha site at 2 and 16 Banks Road, Matamata. The facility incubates eggs and hatches chicks for delivery to third party, contract broiler farms. Mature chickens from the contract broiler farms are taken to the processing plant at 594-668 Waihekau Road, Waitoa.
The processing plant sits on a 62.6ha site with a significant portion of vacant land (31.9ha) that is used for irrigation and grazing.
Silverfin has contracted to purchase all six properties for $86 million. The purchase and investment scheme establishment costs will be funded by investor subscriptions alongside a $43 million bank loan from BNZ.
The tenant, Inghams, is five years into a 25-year lease returning $5,751,683 in annual rent. The current term expires in July 2039. The leases have annual CPI rent reviews through to 2037, with the next review due in July 2019 where upon the rent is expected to increase to $5,837,961 per annum.
Final expiry, if the tenant exercises all five rights of renewal, is in July 2089, representing a total tenure of 75 years.
Ongley says the lease is effectively a ‘triple net’ lease, and all usual outgoings are recoverable from the tenant in addition to many capital costs.
“This greatly reduces the scheme’s exposure to capital costs and operating expenses.”
Ongley says Inghams has been operating in New Zealand from its Waikato base since 1990.
“Parent company Inghams Group is the largest integrated poultry producer in Australasia, processing over 4 million birds per week.
“It has a workforce of 8,000 and a strong network of processing and distribution facilities across Australia and New Zealand.”
New Zealand is considered one of the best places in the world to grow chickens due to the temperate climate, advanced systems and disease-free status.
The poultry industry has a government mandated code of welfare, bolstered by the Poultry Industry Association’s high standards of training and systems.
These factors have made New Zealand chicken in high demand around the world.
Over the last three decades, annual poultry consumption in New Zealand has more than doubled, from about 14kg per person in 1990 to about 37kg in 2018.
This represents compound annual growth of 3.4 per cent a year, slightly higher than worldwide growth of 3.1 per cent. By comparison, over the same period, New Zealand beef consumption declined by 2.5 per cent a year and worldwide consumption remained flat.
This strong growth in chicken consumption is due to continued population growth, greater affordability due to increased production efficiency, and consumer trends including health, wellbeing and convenience.
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