Booster to list property fund

Booster’s Private Land and Property Fund is being opened to retail investors, and is listing on the stock exchange.

Thursday, September 12th 2019, 8:15PM

The fund has its origins in the Booster Tahi fund, the specialist investment fund set up to invest in private equity.

Many of its initial investments were in winemaking businesses which grew to become part of the Booster Wine Group.

But a decision was made to separate off the land component of those investments, which was generating about two-thirds of returns, and put those into a separate fund.

Investors could then choose whether they wanted exposure to one or the other part of the wine investment, or a mix of both.

The investments in the fund have more in common with traditional property investments than the wine businesses overall, with an income stream from fixed lease arrangements and sometimes a supply contract component.

It has an average return of between 6% and 9% and the potential for some capital growth because the fund owns the land asset itself. The wine group in Tahi generates 12% to 15%.

The Private Land and Property Fund has been open to wholesale investors thus far and has $50 million under management. Booster principal David Beattie said it was time to offer that at a retail level because it was close to securing a new investment in the horticultural sector.

The fund would continue to focus on agricultural properties, he said.

The market listing on September 18 would broaden the attraction of the fund, he said, boost Booster’s profile and create more liquidity for investors. At the moment, investors are only able to buy in or out of the fund once a month.

He said the unit price should not differ much from the underlying asset value. If it got too high, investors could sell and re-invest via the monthly structure.

He said daily pricing was not as difficult as some might think because it was based on a fixed lease agreement, a level of income, and a rate of return delivered to investors.

Income will be distributed annually, initially.

Beattie said the fund would offer another diversification opportunity, and a potential for income for those who were struggling to find returns in a low interest rate environment.

Tags: Booster David Beattie investment NZX