Silverfin Capital has created opportunities to look outside traditional asset classes for attractive investment returns. – Informed Investor, Summer 2022
Pine forests and poultry farms aren’t the usual fare for property investors, but they’re proving to be attractive sectors for Silverfin Capital Limited.
Silverfin’s chief executive, Miles Brown, says while the industrial sector continues to be a crowd favourite for investors, rising interest rates are making it tough to find industrial investment opportunities that deliver an acceptable return.
“Silverfin has instead broadened our mandate and has looked outside the box for asset classes that still offer a measured level of risk – but with a stronger level of returns. These property investments may look different to the industrial, retail and office buildings we are used to seeing. However, we’re finding they are popular among investors looking to diversify their portfolios.”
Carbon forest scheme
Brown says one example of an alternative investment is the recent Gowan Lea Carbon Forest Scheme, which Silverfin closed, fully subscribed, earlier this year. This scheme offered the opportunity to invest in a permanent forest with income generated from the receipt and sale of carbon credits.
Gowan Lea forest is an established, midsized forest in Canterbury near the foothills of the Southern Alps. The forest consists of 316ha of freehold land with 185ha of net stocked area.
“The offer was open to wholesale investors only, and the minimum investment was $50,000,” Brown says.
The scheme is projected to deliver an 11 per cent total return per annum (forecast to March 31, 2024), consisting of 8 per cent per annum pre-tax income distribution and 3 per cent per annum pre-tax capital repayment.
“The Gowan Lea forest is forecast to produce carbon credits through to 2048, meaning that level of return should continue well into the future, depending on the underlying price of carbon credits. It’s also an ESG investment that helps New Zealand reduce our carbon footprint,” Brown says.
“It has an existing registration in New Zealand’s Emissions Trading Scheme, and provides immediate exposure to the increasingly important carbon market. With the price of carbon continuing with its upwards trajectory, we are looking to offer further opportunities in this space in the future.”
Gowan Lea Carbon Forest Scheme follows on the back of two other investment agricultural asset classes: schemes delivered by Silverfin in agricultural asset classes:
- A portfolio of four rearing sheds, a hatchery and a processing plant all leased to Inghams Enterprises on an initial 20-year term, valued at over $100 million and providing a return of 8.5 per cent pa.
- A second smaller scheme, consisting of a new rearing shed also leased to Inghams Enterprises for 12 years, valued at $20 million.
Silverfin continues to target the more traditional asset classes as well, where they see value in a property.
Silverfin was started by the late Cheryl Macaulay in 2016, and six years on the company is staying true to her legacy of buying high-quality, commercial and industrial assets.
Brown says while many people may want to invest in commercial property, the cost of buying a quality commercial building on their own can be prohibitive and ongoing management is often a burden.
“Silverfin’s proportional ownership investment structure means that commercial property can become much more accessible, without the high price tag or the time commitment of managing tenants.”
The company aims to syndicate $100 million worth of property every year, and its portfolio is currently valued at over $600 million.