This is an offer to wholesale investors of Units in Kintyre Vineyard Limited Partnership ("The Partnership"). Your money will be pooled with other investors to purchase a vineyard located at 3552 State Highway 63, Wairau Valley, Marlborough. The property totals 147 ha and has a productive area of 93.2 cha planted in 56 cha of Sauvignon Blanc (60%), 8.5 cha Pinot Gris (9%) and 28.4 cha Pinot Noir (31%).
The vineyard will be operated by existing management through to June 2021, including completing this years harvest. From July 2021 Misty Cove is to lease the vineyard for an initial period of 10 years, unless the purchase option is exercised, and one right to renew for a further 5 years. The starting lease rate is expected to be $10,000/cha and 7% of additional capital spent on installing water storage and any redevelopment of previously abandoned areas. There are existing grape supply agreements with four different wineries. The terms of these contracts are expected to be honoured, but will either be exited early by mutual agreement, or given notice of termination upon property settlement.
Returns for the first three and a half years are made up from a combination of the net proceeds (income less costs) of the 2021 grape harvest and the rental payments from Misty Cove, commencing July 2021. The net proceeds from the 2021 crop expect to have been distributed by 2024 - thereafter the returns will be generated solely from lease income.
Subject to the success of this Offer and due diligence, the Partnership will invest in the Kintyre property located in Wairau Valley, using a combination of $11.0 million of contributed capital to be raised in this Offer and $5.04 million of bank debt. The property is to be purchased at the value of $13.8 million, plus the cost of the work in progress for the 2021 vintage. The funding also includes the installation of appropriate water storage and syndicate establishment costs. This provides the Partnership with a loan to value ratio (LVR) of 34% based on the purchase price and proposed capital upgrades.
The Offeror reserves the right to use up to a further $2.0 million of short-term bank debt, and declare the sale and purchase agreement unconditional once it has received applications for $9.0 million of contributed capital. The Offeror will continue to raise the balance of contributed capital to reach the $11.0 million it is seeking, but in the event that the Offeror raises less than this, any shortfall will be funded using additional bank debt. If only the minimum amount of capital is raised, the LVR would increase to 47%. The additional debt could require some principal repayments, which would lower cash returns depending on the key banking terms that are able to be negotiated.
The Offeror may elect to accept or reject over-subscriptions and is entitled to scale, order or reject any application as it sees fit.
The offer is for 1,100 Units in Kintyre Vineyard Limited Partnership at an issue price of $10,000/Unit. The minimum investment is 5 Units ($50,000).
On application, a payment of $2,500/Unit applied for (25%) is required. A further $7,500/Unit applied for (75%) is due on 8th February 2021 for settlement of the property on the 11th February 2021.