Growth Farms Australian Agricultural Lease Fund - Closing December 21

Growth Farms Australia

Growth Farms Australia reports strong investor demand for its Australian Agricultural Lease Fund, an investment trust that will buy agricultural land and water rights and lease them to third-party farming businesses.

"The drought in some regions will not have a major impact on fund performance because it will be regionally diversified and the better farmers, who are the target tenants are still looking to expand," Growth Farms Australia's managing director, David Sackett, says.

Investing in a farm leasing fund is similar to investing in a commercial property fund, where investors receive an income based on the rental yield and are exposed to the change in the capital value of the property, not the value of the business using the property.

For the farmers, the leasing model offers them the opportunity to expand without having to purchase more land outright.

"There is very strong demand from potential tenants as we have been inundated with enquiries" Sackett says.

The fund is a closed-end trust and is open to wholesale investors, with a minimum investment size of $100,000. Its closing date has been extended to 21 December 2018. The target total annual return (internal rate of return or IRR) for the fund is 10-12% post fees, with a target annual distribution of 3.5 - 4%.

For more information about what effect the current drought will have on the fund click here.