Craigmore launches permanent crops fund – exclusive

The fund will focus on own-and-operate properties growing kiwi fruit, apples and wine grapes.

New Zealand-focused farmland manager Craigmore Farming is marketing a new fund to invest in own-and-operate permanent crop properties.

The Craigmore Permanent Crop Partnership could hold a first close by the middle of 2016. It will focus on growing kiwi fruit, apples and wine grapes, Craigmore head of client advisory Nick Tapp told Agri Investor.

“Within the first Craigmore Farming Partnership we have some apples and kiwi fruit assets,” said Tapp. “We are putting together a mix of the three largest permanent crop sectors in New Zealand, which are wine grapes, kiwi fruit and apples.”

Tapp said the partnership would be a long term semi open-ended fund: “We look to have structures that allow investors to exit on a sensible and fair basis. For the majority the ambition is a long-term hold.” He added Craigmore had built strong relationships with private and institutional investors interested in open and semi-open ended investments.

“We expect that to have an income-generating proposition which has relatively low income volatility, unlike dairy which has a cashflow variable with the commodity price and is poor at the moment.”

Tapp said that Craigmore is also looking to invest in vertically integrated assets such as packing houses and cold stores through the Craigmore Permanent Crop Partnership, but that its main focus would be on owning and operating farmland. He said Craigmore intends to create relationships, including offtake deals, with leading wine manufacturers as well as apple and kiwi fruit exporters.

The Craigmore Farming Partnership, which has a mix of investments across dairy, horticulture and red meat, held a final close on NZ$225 million ($176 million; €139 million) in 2014. Tapp said the fund was originally targeting a return of 12 percent, but due to falling dairy prices, “we may fall very slightly short of that but we can still see that there is plenty of opportunity to achieve some quite strong returns in dairy.” He said that the fund had paid a dividend to investors last year, but that it was below the originally anticipated 5 percent planned from 2015.

“We paid a small dividend in 2015. The dividend is inevitably a function of cashflow and profitability. We expect to pay an average of 5 percent over the lifespan of the fund, but it will go up and down with milk prices. The price of milk is low at the moment, so dividends will be right at the low end at the moment.”

Craigmore Farming held a first close for its Craigmore Dairy Partnership II on NZ$75 million ($50.6 million; €46 million) last December.