The sale and lease back of six of Hawke's Bay-based Farmlands' North Island farm supply stores is being touted as a good way of indirectly investing in the farming sector.
Farmlands is auctioning six of its stores, as part of the company's growth strategy, on April 8. Each of the storeswill have a minimum 12-year lease starting from settlement date.
Stores are being sold in Putaruru, Taihape, Opunake, Waipapa, Kaitaia and Paeroa.
A similar auction in late 2009 saw stores sold for between $1,250,000-$1,600,000, at yields 8.2-9.2 per cent.
The properties are being marketed by Colliers International.
Director of research and consulting, Alan McMahon, said the sale offered an alternative to other forms of investment in the primary sector, which were experiencing good returns.
"Scoured wool prices are up 50 per cent over the past six months to levels not seen in 20 years," he said.
"The wool price trend points to $250 million more income for New Zealand in 2011. Sheep meat and beef prices are considerably higher. Lamb prices are up $30 to $40 on a year ago.
"Dairy farmers are also enjoying strong commodity prices, with the 2009-10 season finishing nearly 50 per cent higher than initially forecast, followed by the 2010-11 season opening 8 per cent higher than forecast. The 2011 payout could be the second highest on record."
Farmlands, the North Island's largest rural co-operative had an estimated 25 per cent share of the North Island rural merchandise market, achieving sales revenue of $561 million in 2009-10 and delivering profit distribution to its 27,000 shareholders of $36.1 million, compared to $14 million in 2003.
Turnover in the current year was forecast to be close to $700 million. It was ranked 59th in the Deloitte-Management Top 200 Companies List in 2010.
