Major agri investment and management company MyFarm has finally secured its first kiwifruit orchard investment in the Bay of Plenty.
The company has an agreement to buy 10ha in Te Puke made up of 4.89 canopy hectares of green kiwifruit surrounded by native bush gullies.
MyFarm sales manager Grant Payton declined to disclose the selling price until the deal completes later this month, but said it was below recent sales for comparable orchards.
It is understood to be in the range of $1.6 to $1.9 million.
MyFarm is a major dairy, beef and sheep farm investor. It announced its plan to enter the kiwifruit sector early last year, and near the end of the year announced its first investment, completing a $5 million syndication for a 24.6 canopy hectare green kiwifruit orchard at Karaka, in Auckland.
However, surging prices in the Bay of Plenty have made it hard to secure the right property in the region.
"It's taken a while," said Mr Payton. "We need to be able to have a price we can justify for our shareholders. It's taken us a while to find something we can present to our investors.
We've been doing plenty of homework these past 12 months - looking for the right kiwifruit investments capable of earning sustainable, above-average returns," Mr Payton said.
MyFarm has been working with Newnham Park, Te Puna-based agri-tech group Gro-Plus, and looked at 15 orchards in the Bay before making an offer on the property, which is on No 2 Rd, Te Puke.
Gro-Plus managing director Steve Saunders said the challenge for MyFarm had not been finding orchards, but finding orchards suitable for investors.
"Both Gro-Plus and MyFarm assessed several orchards, with most having issues with location, price, orchard and vine health, or simply being at what we perceived to be at their production limit," he said.
"Several orchards were also being sold by tender - which is typical for a hot market. "But tenders make it difficult to negotiate the terms and time we require to ensure we represent the best interests of investors in respect of due diligence and depending on the orchard, an extended period to raise some additional equity."
The syndicate has raised about $1 million over the past year, and is now going back to investors to raise an additional $500,000 in $50,000 tranches, by March 21, when the sale goes unconditional. Mr Payton said there was plenty of interest, with investors waiting on a suitable property to become available.
The property was forecast to repeat a record 2015 yield of 13,800 trays/per hectare, and with the takeover set for 30 March, MyFarm's syndicate - Bay Kiwifruit Limited Partnership (BKLP) - will receive all income from the 2016 harvest.
MyFarm is forecasting average yields of 6 to 8 per cent per annum from year one.
MyFarm, established in 1990, has 47 dairy farms and seven sheep and beef farms with more than 300 syndicate investors and an asset value of $550 million under management.