Our services to private and institutional investor
Ourservices to private and institutional investors
Miller & James offer complete property management solutions to investors who see rural property as an attractive asset class.
In the first instance, Miller and James identify suitable farms, which meet certain investment criteria and risk parameters. After a ‘ground truthing’ due diligence process, the findings are reported back to the investor. The next step is to set up an entity to hold the asset. Miller and James have close relationships with several law firms, all of whom specialize in rural transactions and foreign investment. Also, at this stage, an accountant needs to be appointed. The solicitor and the accountant work closely together to ensure the optimum investment vehicle is created for the farm investment.
On most occasions, prior to the purchase of the property, Miller and James have already identified a tenant who is interested in a long-term lease of the farm. Miller and James have access to a large pool of quality farmers who are interested in increasing their operations through leasing additional farmland. It is important to take special care in selecting the right tenants. A good tenant is important to ensure your farm will improve in quality, fertility and appearance and ultimately, also in value.
Once the property is purchased, the next stage is the management of the lease for the investor. Miller and James ensures the lease payments are made on time and takes care of the invoicing, collection of GST, and CAPEX issues. If a tenant believes funds need to be spent on improving infrastructure, Miller and James will conduct an on site visit, collect quotes, and then advise the investor on the best way to proceed.
Miller and James also provide annual reports on the cropping program and other relevant facts to the investor. This might include a summary of commodity price trends or a detailed analysis of the weather.
At the end of the lease term, Miller and James will either renegotiate an appropriate new lease price with the existing tenant or find a new tenant.
Leases can be structured in many ways. Miller and James usually recommend five year leases, but they can be for shorter or longer periods. The lease price is often linked to CPI (consumer price index) and will increase on a yearly basis. The lease yield depends on many factors such as, the region where the farm is situated, whether it is a cropping farm or a mixed farm, whether there is expensive infrastructure on the property etc. Lease yields currently range from 4% to 5.3% based on the purchase price. Lease yields have reduced slightly over the last few years, mirroring falling interest rates across the globe.
Miller and James currently manage close to $100 million worth of farming assets across Australia on behalf of local and overseas based investors. The farms are in NSW, QLD and Western Australia. The purchased farms include cropping, sheep farms and cattle stations.
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