This is an offer to Wholesale Investors for Units in Ōhanga Properties Limited Partnership Tikorangi Extension ("The Partnership"). Your money will be pooled with other investors to invest in the Ōhanga Properties Limited Partnership and further to purchase a 5.1 ha property located at 116 Ngatimaru Road, Tikorangi, North Taranaki.
The Ōhanga Properties Limited Partnership currently owns a property at 2316 Rakaia Highway which comprises of six specialist sheds and associated equipment operated in two separate units breeding approximately 120,000 chicks each year.
Located on a 3-ha site, the chicken sheds are leased to Tegel Foods Ltd, a wholly owned subsidiary of Tegel Group Holdings Ltd. The lease term is to 8 February 2033, with three rights of renewal for five years thereafter. The Lessee is responsible for all outgoings and maintenance requirements.
The remaining 17-ha is leased to Rhodes Hills Ltd for calf rearing, heifer and beef grazing. The rental is $17,000 +GST for a term of three years with no rights of renewal. On expiry, the Partnership will need to find another lessee and/or take possession of the 17-ha property. This may mean a period of no rental income for that part of the property.
The cash return to investors is 6.5% p.a. paid monthly. The mix of 3% p.a. and CPI rent review is forecast to see cash returns increasing over time. Additional spare cashflow is expected to be directed to debt reduction or maintenance costs.
The Partnership invested in the property located at Rakaia, Canterbury, using a combination of $6.45 million of raised capital and $3.385 million of bank debt. The property was purchased for $9.305 million with residual capital covering establishment costs. This provided the Partnership with a loan to value ratio (LVR) of 36%.
A new opportunity has now arisen to extend Ōhanga Properties Limited Partnership with a second Poultry Breeding Unit in North Taranaki. The property is leased to Tegel Foods Ltd and has the same underlying investment credentials that were popular with Ohanga’s 2316 Rakaia Highway property.
The Tikorangi property comprises of four poultry breeding sheds, a modest manager’s 3-bedroom dwelling and two utility sheds.
This property is also leased to Tegal Foods Ltd, a wholly owned subsidiary of Tegel Group Holdings Ltd. There is a built-in annual rental growth of 3% p.a. through the initial term to 1 October 2029, with three rights of renewal of five years each. The Lessee is responsible for all outgoings and maintenance requirements.
The Tikorangi property has been contracted for $6.7 million with a ‘cap rate’ of 6.1% p.a. on the current rental income.
Overall combining the two properties provides a starting rental cap of 6.35% p.a. built-in annual rental growth of 2.4% p.a. and initial weighted-average lease term of 10.7 years. This assumes CPI adjustment of 1.5% on approximately 36% of the rental value, with the balance of the rent growing at 3% p.a.
The total extension is expected to cost $7.18 million (including fees) and is to be funded with a similar debt/equity ratio (35% LVR) as the existing Partnership. This means MyFarm is seeking $5.0 million of investor equity through the issue of new Units and $2.18 million of bank debt.
Initial investor returns are maintained at 6.5% p.a. The new property has built-in rental growth of 3% p.a. which is forecast to lift future distributions to Ohanga Investors.
In the event that the Offer is under-subscribed at the closing date of 28 June 2021, MyFarm will hold any unsubscribed units as Unpaid Units. These would then continue to be marketed as Unpaid Units on the secondary market after the Offer has closed, at the Offer price of $10,000/Unit.
$1.5 million of underwrite will be obtained from an underwrite fund currently operated by MyFarm – MyFarm UF1 Limited Partnership. The costs relating to such the underwrite will total a once off payment of $37,500 and will be directly paid by the Ōhanga Properties Limited Partnership.
The Offeror may elect to accept or reject over-subscriptions and is entitled to scale, order or reject any application as it sees fit.
A payment of $2,000/Unit applied for (20%) is required no later than 5pm Thursday 17 June 2021.
The final payment of $8,000/Unit applied for (80%) is due 28 June 2021 to enable settlement to occur on 1 July 2021.