The $3 billion home-grown investment business, Booster, is to launch a new unlisted property fund focusing on NZ agricultural land.
Housed under a new investment scheme structure – Booster Investment Scheme 2 – the Land and Property Fund would initially hold real estate assets ‘unbundled’ from the group’s private equity vehicle, Tahi.
According to Booster principal, David Beattie, the new fund would take over ownership of the land currently included in the Tahi vineyard assets.
“We think we can provide better risk-return opportunities by unbundling the land and wine-making assets,” Beattie said.
He said vineyard land typically returned about 7 per cent in rental income each year while the wine-production business could outperform that figure by double or more.
As a consolidated asset, returns from the land and wine-making business would be about 10-12 per cent, which was something “of a no-man’s land”, Beattie said, with a muddled risk-return profile.
Tahi, which other Booster funds including the group’s KiwiSaver scheme invest into, currently owns three vineyards: Sileni Estates in Hawke’s Bay; Awatere River Wine Company (of Marlborough); and Nelson’s Waimea Estates.
The private equity fund also owns a slice of the Bay of Plenty avocado business, Sunchaser, that may ultimately cede its land to the Booster property fund too.
Beattie said the new land fund would be fed by regular flows from the rest of the Booster diversified product range, which would up their exposure over time.
“At the moment our funds have an exposure of about 8-10 per cent to listed property,” he said. “We think ultimately at least half of that will go the unlisted property fund – and there’s no reason it can’t go beyond that if the valuations make sense and we have enough diversity [in the unlisted land fund].”
The fund would invest in assets outside the related party Tahi land as soon as possible, Beattie said.
According to the Booster statement of investment policy and objectives (SIPO), the unlisted property fund can allocate to a range of assets, namely:
- NZ unlisted property (direct or via funds);
- NZ listed property;
- property-related exchange-traded funds;
- Australian and offshore unlisted property (direct or in fund form); and,
“The Fund aims to invest primarily in a diversified range of agricultural and horticultural land and property in New Zealand, which may be supplemented with direct investments in industrial, commercial, and retail properties, both in New Zealand and overseas,” the SIPO says. “The Fund may also borrow money to invest in more land and properties or to develop land and properties already held by the Fund.”
Beattie said the fund’s formal launch was “a few weeks away” pending final documentation and regulatory approval.
Last week Booster also signed on to a global initiative calling for index providers to scrub ‘controversial weapons’ firms from their benchmark products.
“The request to global index providers, including S&P Global, MSCI and FTSE Russell, is to remove companies involved in controversial weapons manufacture from the major index funds,” a Booster statement says.
Investors and asset-owners representing funds of more than US$6 trillion have signed the index petition since it was inked by Switzerland-based firms Pictet and Swiss Sustainable Finance last August.
More than 60 asset-owners and 55 plus fund managers have backed the index plea, which remains open to further signatories until the end of January this year.