As investor interest grows, more and more agricultural property deals are being structured as ‘sale and leaseback’ transactions, especially in capital intensive agricultural businesses such as horticulture or irrigated operations, according to the property group Colliers International. Under this structure, land or assets are sold to a party under the agreement that the buyer will then rent it back to the seller for a fixed period of time, thereby allowing funds to be dedicated to the yields of the operation instead of being tied up in the land. Olam Australia forged a $200 million, 18-year sale and leaseback agreement for its almond orchards with Adveq Almond Trust; private equity group, TPG raised $650 million through the sale and leaseback of its portfolio of properties, and the 415 hectare Qualco West Vineyard in South Australia was sold under the same sale and leaseback structure to Belvino Investments. Although currently popular, Colliers cautions that changes in interest rates or currency exchanges, or the value of assets could dampen the interest in these types of deals.
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